Introduction to

Corporate
Governance
Governance
 Generally, it refers to a process whereby elements in society wield power,
authority and influence and enact policies and decisions concerning public
life and social upliftment.
 Specifically, it is the process of decision-making and the process by
which decisions are implemented (or not implemented) through the
exercise of power or authority by leaders of the country and/or
organizations.
Corporate Governance, International Governance, National Governance,
Local Governance.
 Characteristics of Good Governance
Consensus Oriented
Rule of Law Transparency

Equity and Good Effectiveness

Inclusiveness Governance and Efficiency

Accountability Participation
Responsiveness

CLEARPET
Consensus Oriented
 requires mediation of the different interest in
society to reach a broad consensus on what is in
the best interest of the community and how this
can be achieved.
Rule of Law
 requires fair legal frameworks that are enforced
impartially and full protection of human rights,
particularly those of minorities.
Equity and Inclusiveness
 ensures that all its members feel that they have
a stake in it and do not feel excluded from the
mainstream of society and have opportunities to
improve or maintain their well being.
Accountability
 an organization or institution is accountable to
those who will be affected by its decisions or
actions.
Responsiveness
 requires that institution and processes try to
serve the needs all stakeholders within a
reasonable timeframe.
Participation
 needs to be informed and organized which
freedom of association and expression on one
hand and an organized civil society on the other
hand.
Effectiveness and Efficiency
 processes and institutions produce results that
meet the needs of society while making the best
use or resources at their disposal in sustainable
and protection of the environment.
Transparency
 that decisions taken and their enforcement are
done in a manner that follows rules and
regulations which information should be freely
available and accessible.
Corporate Governance
 the system of rules, practices and processes by
which business corporations are directed and
controlled.
Involves balancing the interests of a company’s
many stakeholders.
Purpose of Corporate Governance
 enhance the shareholders’ value and protect the
interests of other stakeholder by improving the
corporate performance and accountability.
 what the board of directors of a company does,
how it sets value of the business firm.
 Objectives of Corporate Governance
Fair and Equitable • All shareholders deserve equitable treatment and
Treatment of this equity is safeguarded by a good governance
Shareholders structure.
• Active and independent board can successfully point out
Self-Assessment deficiencies or loopholes in the company operations and
help solve issues internally on a timely basis.
Increase • Firms with strong corporate governance structure
Shareholders’ are seen to have higher valuation attached to their
Wealth shares by businessmen.
• Good governance aims at ensuring higher degree of
Transparency and
Full disclosure transparency by encouraging full disclosure of
transaction in the company accounts.
 Basic Principles of Effective CG

Transparency and Full Disclosure Accountability

Is the board telling us what is going on? Is the board taking responsibility?

Good and Effective Governance

Corporate Control
Is the board doing the right thing.