Department of Management Sciences

Muhammad Burhan
Roll # 15739
Corporate Governance
Quiz
Submitted to: Sir Zahid Maqbool
Q1: What are the three approaches to corporate governance? Which of these approaches would
you consider most appropriate for boards in Pakistan why?

a) What are the three approaches to corporate governance?

There are three approaches to corporate governance:

1. Shareholder’s Approach
2. Stakeholder’s Approach
3. Enlightened Approach

1: Shareholder’s Approach

In shareholder’s approach the directors should govern and lead the company for the best interest of
its shareholder. And in the shareholder’s approach all directors of the company are elected by
company’s shareholder and they are accountable to their shareholder because shareholders are the
owners of the company. And I think this approach is widespread in Pakistan.

2: Stakeholder’s Approach

This approach is also called ideal approach and it is not a practical approach. In this approach board
of directors are provide the equal care of interest to their all stakeholders.

3: Enlightened Approach

In this approach board of directors are work for the best interest of their shareholder’s but without
damaging the interest and right of the stakeholders.

b) Which of these approaches would you consider most appropriate for boards in Pakistan why.

According to my opinion, enlightened approach is most appropriate because this approach provides
the two main benefits. In this approach we can take care the interest of shareholders without
damaging the interest and rights of stakeholders. In this approach we can get the satisfactions of all
the stakeholders and shareholders. And company can get the good reputation in PSX. And because
of good reputation may be in future more people will invest their money in company.