Professional Documents
Culture Documents
According to OECD:
(organization for economic corporation development)
Corporate Governance is the system by which business
corporations are directed and controlled. The corporate
governance structure specifies the distribution of rights
and responsibilities among different participants in the
corporation, such as, the board, managers, shareholders
and other stakeholders, and spells out the rules and
procedures for making decisions on corporate affairs. By
doing this, it also provides the structure through which
the company objectives are set, and the means of
attaining these objectives and monitoring performance.
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Another Definition
According to LaPorta et al., (2000),
Corporate governance is a set of mechanisms
through which outside investors protect
themselves against expropriation by the
insiders. They define the insiders as both
managers and controlling shareholders.
Governance and
Management
How do these terms differ?
Does Governance include Management?
Or
Does Management include Governance?
Function
Management
Approval of Plans
Planning
Preparation of plans
Providing overall
leadership
Leading
Arranging
resources
Organizing
Controlling
managers
Controlling
Controlling
employees
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Governance
Strategic
Setting Objectives
Devising plans to achieve these objectives
Setting rules or parameters
Not directly concerned with routine affairs
Protection of Interests of all stakeholders
Management
Current Affairs
Implementing the Plans
Developing Suggestions and Alternatives
Operational Matters
Stakeholders in a Company
Classification of Stakeholders
Classified on
basis of Role
in the Company
Those with a
Partial Opportunity
Those with
Virtually No opportunity
Owners
Controlling
Shareholders
Institutional Investors
with Board representation
Lenders
Financial institutions
with elaborate lending
Contracts
Other lenders
Employees
Executive Directors
Senior Managers
Other employees
on regular or
contract terms
Business Associates
Smaller suppliers
and smaller clients
Government
Public at large
Society
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Opportunity to protect
individual interests
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Shareholders
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Controlling Groups
If in Majority:
Can protect their interest easily
Need monitoring
If in Minority:
Can protect their interest easily
Need highest degree of monitoring
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Outsider Shareholders
Institutional Investors
Have some means of protecting their interest
but still require protection
Individual or General Public
They require the greatest degree of protection,
as they have virtually no means of protecting
their interest.
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Lenders
Institutional Investors
Have some means of protecting their interest through
legal documentation, are relatively at lower risk but
still require protection
Individual or General Public
They require the greatest degree of protection, as they
have virtually no means of protecting their interest.
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Society at Large
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Corporate Hierarchy
1.
2.
3.
Shareholders
Board of Directors
Management
4.
CEO
Executive Directors
Senior Managers
Employees
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Key Players
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Interests
Individual
Stakeholders
Objectives / interests
Shareholders
Lenders
Employees
Business
Associates
Society
Tools / Techniques
General Management
Legal frame work
Professional Codes
Industrial practices
Strategic Management
Risk Management
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Country Club
Board
Trophy Board
Paper
Board
?
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Oversight
Directional
Advisory
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Objectives of CCG
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