Professional Documents
Culture Documents
Corporate governance which can be defined narrowly as the relationship of a company to its shareholders or, more broadly, as its relationship to society
OBJECTIVE
Better access to external finance Lower costs of capital Improved company performance Higher firm valuation and share performance Reduced risk of corporate crisis and scandals
Interests
Role
Integrity
Disclosure
and transparency
of 'strategic planner' role from 'operator' role 'exit strategy' for company owners
An
Reliable
Key
Performance Indicators
Credible
accounts
Importance Growing
Indifference
Globalization Takeovers
and Mergers
ADVANTAGES
DISADVANTAGES
Independent Directors and Audit Committees. Reduced risk in corporate and financial malpractices.
PRIVATE SECTOR
3 board categories of shareholders, promoters and financial institutions. Majority rule voting system. Candour and forthrightness sacrificed at the altar of courtesy and politeness. No incentive to the Nominee Directors. Scattered and ill organised individual shareholders. React slowly to view opportunities.
PUBLIC SECTOR
Equity shares are owned wholly or substantially by government. Political and bureaucratic influence. Constrained by various regulations and administrative guidelines. Chief executives have short tenure. Weak manpower.
CURRENT SCENARIO
A survey by ET gave some results like
Value creation focus. Fair policies and actions. Communication. Effective governing board. Reliability.
Features
Anglo-American CG
German CG
Japanese CG
Indian CG
Corporate objectives
Shareholder value.
Government focus
Measures of success
Capital market
Corporate body
Decision making
Control of corporate
Features
Anglo-American CG
German CG
Japanese CG
Indian CG
Investor commitment
Low
Low.
To promote shareholder wealth Dynamic, market based, liquid capital, internalization, non-problematic
To promote long term organizational health. Long term industrial strategy, stable capital, strong overseas investment.
Strength
Log term Recent govt. & industrial strategy, organizational stable capital. activism towards CG practices.
Weakness
CONCLUSION
Threat to future of every corporation. Adopt a set of principles & best practices. Builds corporate image & reputation.