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Mayank Agrawal Mohd.Javed Sanjay Sharma
Definitions. What is Corporate Governance? Importance of Corporate Governance. Objectives of Corporate Governance. Parties to Corporate Governance. Enterprise Strategies. Impact. The Future. Failure. Conclusion.
“Corporate governance is the
system by which companies are directed and controlled….” -Cadbury Report (UK), 1992
“Corporate governance deals
with the ways in which suppliers of finance to corporations assure themselves of getting a return on their investment.” (Shleifer and
Some further Definitions…!!!
Corporate governance is essentially about leadership:
Leadership for efficiency. Leadership probity. Leadership with responsibility. Leadership which is transparent and accountable.
Portfolio of Corporate Governance ....
A set of relationships between a company’s management, Its shareholders and other stakeholders Its board,
..also the structure through which objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined.
Importance of Corporate Governance
Business prosperity and accountability. Stakeholders with a relevant interest in the company’s business are fully taken into account. Prevention of malpractice and fraud, although it cannot prevent them absolutely
BJECTIVES OF RPORATE VERNANCE
To build up an environment of trust and confidence amongst those competing and conflicting interest.
To enhance shareholders’ value and protect the interest of other stakeholders by enhancing the corporate performance and accountability.
Parties to Corporate Governance
Responsible for the company’s daily operations and daily affairs. Provides and updates conditions and incentives for the company’s MANAGERS
Powerful (in theory) because they elect board and vote at AGMs. In order to exert influence, they should be: -committed -knowledgeable -long-term. SHAREHOLDERS
BOARD OF DIRECTORS The board is “the source and focus of proper accountability of management to shareholders.”
Enterprise Strategies :
CUSTOMER VALUE. OPPORTUNISTIC.
“ Effec tive m ana gers l ive in t he prese nt bu t conc ent ra te on the fut ure”
MAXIMUM UTILISATION OF RESOURCES. SWOT ANALYSIS. FOCUS ON COMPANIES EXTERNAL COMPETITIVE ENVIRONMENT & INTERNAL CAPABILITIES.
SETTING UP OF NEW GOALS THROUGH PROPER VISION & CREATIVE THINKING. CUTTING EDGE OF NEW TECHNOLOGIES. CONTANTLY EVALUATE YOUR PERFORMANCE.
IMPACT OF CORPORATE GOVERNANCE
A Strong Corporate Governance: Strengthens the economy. Helps in Socio-Economic Development. Technological advancements. Affects standard of living.
The Triple-Bottomline Impact
THE TRIPLE EFFECT ON SOCIETY
development. Waste Control. Energy Usage.
Generation. Productive Employment.
Equal Opportunities. Education & Culture. Human Rights.
Core Factors…towards FUTURE…!!!! Consequences of decision in the long term. Interest of the company’s employees. Need to foster the company’s relationship with
suppliers, customers & others. Desirability of the company maintaining a reputation for high standards of business conduct.
Factors Responsible for corporate Failure
Directors may not have the proper skills required of the corporate, allow management to obscure problems. Directors appoint CEO’s which make it difficult for them to evaluate the CEO’s performance passionately. CEO’s tend to exercise too much influence over the company’s board. Effect of Government hard-hitting policies.
How to Overcome Failures…
Management must be goal oriented. A company should have a skilled organizational structure (i.e. starting from Board of Directors to Lower Level Of Employees). The internal environment of the firm should be healthy. Last but not the least “Minimum Input & Maximum Output”.
Some closing thoughts…!!!
• Right size of the Board and Its Composition. • More focus on oversight, Less on Micro- Management. • Having complementary skills. • Respect Shareholders Rights.