Problems with the management of corporations

 Managers use corporation’s resources to

benefit themselves
 Corporations take actions that are not

desirable by society / stakeholders

 Corporations hide information or provide

false information to shareholders

 Mismatch of payments received by managers

with their performance.

 The procedures and processes according to
which an organization is directed and controlled.
The corporate governance structure specifies the
distrbution of rights and responsibilities among
different participants in the organization, and
lays down rules and procedures for decision
making.
 Advantage  provide assurance that the
company is appropriately managed  gain
competitive edge  reduce perceived risk 
reduce cost of capital
 Corporate governance is needed for an efficient
market and to facilitate economic growth
 Shareholders or owners (traditional view)
 Anglo saxon model  enabling efficient use

of resources, efficient captal market, and thus

increase shareholder value
 Pluralist model  wider range of stakeholder,

such as employees
 Firms as nexus
of contracts

Agency costs :
Agency contracts:
monitoring,
Manager – shareholder
bonding,
Manager - creditors
residual loss

Manager – shareholder agency reationship:

Agency problems
Bonus plan
Bonus plan hypothesis
 Controlling and directing the directors and senior
management
◦ Ensure that key managers make appropriate decisions
that they cannot and do not act in their own interests
 Role of shareholders and other stakeholders
◦ Ensure that shareholders have the ability to protect their
interests in the corporation  directing the company and
control
 Transparency and accountability
◦ Ensure that stakeholders are sufficiently informed about
the entity’s activities and its management, and to allow
managers meet their accountability obligations
 Rules-based approach
 Identifies precise practice that are required or

recommended to ensure good corporate

governance.
 Principles – based approach
 Identifies general principles or objectives for

the corporate governance system to achieve

 Increased focus on risk management
◦ Many corporate scandals and financial crisis are
caused by lack of risk assessment
 Executive remuneration
◦ Causes of financial crisis can be linked to
remuneration packages received by managers and
executives
 Accounting provides information for directing
and controlling operations
 Accounting provides the means for outsiders

to monitor the corporation and its managers

 Key requirement in corporate governance 

transparency and accountability

 Financial reporting problems stem from

earnings management by managers 

overcome the problem with increasing the
role of ethics
 UNDP mengemukakan 9 (sembilan) prinsip good
governance, yaitu:
 Participation (partisipasi)
 Rule of law (kepastian hukum)
 Transparancy (transparansi)
 Responsiveness (daya tanggap)
 Consensus orientation (berorientasi pada
kesepakatan)
 Equity (keadilan)
 Effectiveness and efficiency (efektivitas dan
efisiensi)
 Accountability (akuntabilitas)
 Strategic vision (visi stratejik)
1. Apakah tujuan corporate governance (CG)?
Apakah manfaat dari CG?
2. Apa saja unsur dalam CG?
3. Jelaskan pendekatan dalam CG.
4. Jelaskan hubungan CG dengan teori
akuntansi positif dan akuntansi.
5. Apakah kekurangan dalam struktur CG yang
ada saat ini?
6. Berilah 3 contoh masalah korporasi yang
mengindikasikan tidak optimalnya CG.