Professional Documents
Culture Documents
• Privatization of government-owned
businesses esp. utilities, infrastructure
• M&As, strategic alliances-need for due
diligence
• Regulatory requirements/ expectations
• Societal concerns, social audit, CSR
Rights of shareholders:
• Ownership registration, transfer
• Disclosure of/ access to relevant and material
information on timely basis
• Right to participate in decisions about fundamental
corporate changes
• Opportunity to participate effectively in shareholder
meetings
• Markets for corporate control to be transparent and
efficient; avoid misuse of anti-take-over devices
• Institutional investors’ fiduciary role
Prof. S R Prasad: MBA 042 Corporate
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Governance:, Values & Ethics
CG Framework: Features for Effectiveness
Equitable treatment of shareholders including:
minority shareholders
foreign shareholders
• Equal treatment
• Protection of minority shareholders from abusive
action
• Prohibition of insider trading
• Disclosure by directors/senior management of
shareholding, material interest in transactions
Responsibilities of Board:
• Directors to act fully informed, in good faith
• High ethical standards
• Fair and equitable treatment
• Lay out corporate strategy
• Set performance objectives
• Monitor performance
• Selecting, appointing directors, senior management
• Managing conflicts of interest
Prof. S R Prasad: MBA 042 Corporate
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Governance:, Values & Ethics
Evolution & Foresight of Business
‘Business started long centuries before the dawn
of history. But business as we now know it is
new- new in its broadening scope and new in its
social significance. Business has not learned
how to handle these changes. Nor does it
recognize the magnitude of its responsibilities for
the future of civilizations’
Wallace B. Donham
Dean of Harvard Business School- 1929
Ownership Concentration
Board of Directors
• Board must meet at least four times a year, with a maximum time
gap of four months between two successive meetings.
• Deferred tax liabilities and assets and debit/credit in the P&L for the
reporting year
• Computer Associates
– Artificially inflated revenue and improperly rewarded top
executives.
• CMS Energy
– Overstated revenues in 2000 and 2001 thru ‘round trip’ energy
trades?
• Dynegy
– Transactions to cut taxes and artificially increase cash flow ?
• Kmart
– Suspected improper accounting for vendor allowances
• Lucent Technologies
– Adjusted fiscal 2000 revenues by $679 million.
• Several more names, respected world-over
– AOL Time Warner, Bristol-Myers, Elan,Halliburton, ImClone
Systems, Microstrategy, Mirant, Network Associates, Xerox etc.
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Governance:, Values & Ethics
Corporate Mis-Governance