Contoh tampilan penyajian PETA KONSEP RINGKASAN MATERI KULIAH

RINGKASAN MATERI KULIAH

Topic: Kelompok 1: Nama, NIM
DEFINING CORPORATE GOVERNANCE Nama, NIM
AND KEY THEORETICAL MODELS Nama, NIM

Introduction
One of the important rights that voting shares confer to their holders is the right to appoint the members
of the board of directors. The board of directors is the ultimate governing body within the corporation.
Its role, and in particular the role of the non-executive directors on the board, is to look after the
interests of all the shareholders as well as sometimes those of other stakeholders such as the corporation’s
employees or banks.

Mind Map [Peta Konsep]

Defining Corporate
The agency
ownership and
corporate problems of
control are
governance equity and debt
concentrated

Corporate Ownership
governance Agency
and control
theory problems

Defining corporate governance

 Andrei Shleifer and Robert Vishny define corporate governance as:
‘the ways in which suppliers of finance to corporations assure themselves of getting a return on their
investment.
 Marc Goergen and Luc Renneboog
‘[a] corporate governance system is the combination of mechanisms which ensure that the
management (the agent) runs the firm for the benefit of one or several stakeholders (principals).
Such stakeholders may cover shareholders, creditors, suppliers, clients, employees and other parties
with whom the firm conducts its business.
 Company directors must act bona fide in accordance to what would most likely promote the success
of the company for the benefit of the collective body of shareholders. In other words, while directors
Page | 1
 are expected to take into account the interests of other stakeholders, they should only do so if this is
in the long-term interest of the company, and ultimately its shareholders, i.e. its owners.

Corporate governance theory

 The conflicts of interests that may exist between a so-called agent and the agent’s principal. These
conflicts of interests were later formalised by Michael Jensen and William Meckling in their
principal–agent theory or model which was introduced in their seminal 1976 paper.
 The agent may not act in the best interest of the principal once the contract between the two parties
has been signed and may prefer to pursue his own interests. This type of danger is what economists
normally refer to as moral hazard.
 A necessary condition for moral hazard to exist and for complete contracts to be an impossibility is
the existence of asymmetric information.
 Returning to Jensen and Meckling’s principal–agent model, apart from the existence of asymmetric
information the model also assumes that there is a separation of ownership and control in the
corporation

Agency problems
 The two main types of agency problems are perquisites and empire building.
 Perquisites or perks – also called fringe benefits – consist of on-the-job consumption by the firm’s
managers. While the benefits from the perks accrue to the managers, their costs are borne by the
shareholders.
 Empire building consists of the management pursuing growth rather than shareholder-value
maximisation. While there is a link between the two, growth does not necessarily generate
shareholder value and vice versa.

The agency problems of debt and equity

 There exists a second type of agency problem. This agency problem relates to the other main source
of financing which is debt.
 Remember that the debtholders’ claims are more senior than those of the shareholders. This implies
that when the firm’s assets are insufficient to meet all the claims it is facing, it will first meet the
claims of the debtholders.

Corporate ownership and control are concentrated

 In most quoted corporations across the world control lies with one or few shareholders and not with
the management as in the UK and the USA. These controlling shareholders are frequently other
corporations, families or governments to just a few types of large shareholders.
 These corporations have two types of shareholders: the controlling shareholder(s) and the minority
shareholders. As a result, the main corporate governance problem in most corporations across the
world is not the classic agency problem between the managers and the shareholders, but the potential
expropriation of the minority shareholders by the controlling shareholder

Page | 2
Defining ownership and control
 Ownership is defined as ownership of cash flow rights. Cash flow rights give the holder a pro rata
right to the firm’s assets (after the claims of all the other stakeholders have been met) if the firm is
liquidated and a pro rata right to the firm’s earnings while it remains a going concern.
 Control is defined as the ownership of control rights.
 Control determines the level and the type of corporate governance problems that are likely prevail in
a given company.
 In most countries of the world it is a requirement for major shareholders to disclose their ownership
of the firm’s control rights, but no such requirement exists for cash flow rights.

Closing Remark
 The definition this book adopts is that corporate governance deals with conflicts of interests between
the providers of finance and the managers; the shareholders and the stakeholders; as well as between
different types of shareholders (mainly the large shareholder and the minority shareholders); and the
prevention or mitigation of these conflicts of interests.
 The main theoretical model of corporate governance is the principal–agent model.
 The main corporate governance issue that is likely to afflict these corporations is the expropriation of
the minority shareholders by the large controlling shareholder.
 Corporate governance problems that may prevail under different combinations of ownership and
control.

CATATAN:
Custom margins 2, 2, 2, 2
Font: Goudy Old Style 12 atau Arial 11
Spacing: 1.15
Maximum number of pages: 6

Page | 3