Corporate Governance

Assignment

By Group 2:
Andhika Sinusaroyo
Agung Taufiqurrakhman

IMBA-09 Jakarta
 What is Corporate Governance?
1
Why does it Matter?

2
 What is Corporate Governance?

◉ Corporate Governance is the system and structure of rules, practices, and

processes used to direct and manage a company in order to achieve defined
objectives for the company.
◉ It involves a set of relationships between a company’s management, its board, its
shareholders and other stakeholders.
◉ The 8 principles that underpin every system of governance: transparency, rule of
law, participation, responsiveness, equity, efficiency and effectiveness,
sustainability, and accountability.
◉ Good corporate governance is created when all these principles are aligned and
creates a sustainable increase in both shareholder value and the satisfaction of
other related stakeholders of the company.
3
 Why does it matter?

◉ From the companies’ operational perspective, good corporate governance ensures

that the firm creates a balance between the economic and social goals of a
company including such aspects as the efficient use of resources, accountability in
the use of its power, and the behavior of the corporation in its social environment.
◉ From the companies’ investors perspective, having proper governance mechanisms
may provide a company with a competitive advantage in attracting investors who
are prepared to pay a premium for well-governed companies. Furthermore,
Institutional investors put issues of corporate governance on a par with financial
indicators when evaluating investment decisions.
◉ Based on the viewpoints above, we can infer that the benefits of the installment of
good corporate governance directly related with sustainability of a firm and that
firm’s success.
4
 Who enjoys the benefits of good corporate
governance?
2
Please explain

5
 Who enjoys the benefits of good corporate
governance? Please explain

◉ As corporate governance is generally considered as an environment of trust,

ethics, moral values and confidence encompassing all the constituents of
society, it’s benefits could effect all of the companies related stakeholders, i.e.
the government, the general public, professionals/service providers, and the
corporate sector.
◉ As mentioned before regarding investor attraction to companies which posses
good corporate governance, the company practicing good corporate
governance itself would reap the benefits of it.
◉ All this creates a ecosystem of shared values and benefits between the
company and it’s related stakeholders through the sustained value the company
creates for its’ stakeholders, and eventually the sustainability of the company
itself.
6
Thanks!