Corporate Governance

“Corporate governance is
the system of rules,
practices and processes
by which a company is
directed and controlled”
 Corporate Governance
Fady Victor Adly 21227038
Fady Magdy Kameel 21227536
Hesham Ashraf Attia 22128685
Mohamed Emad 20221006
Ahmed Samir Sabry 22125618
Omar Ahmed Hammad 22126659
Emad Omar Saad 22127563
Corporate Governance Aims
1. Define relationships between a company’s
management, its board, shareholders and
other stakeholders.
2. Provide a structure through which the
company’s objectives are set, and how they
are achieved and monitored.
3. Recognize the value of business ethics and
corporate awareness of society interests to
reputation and long-term success.

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Scope of Corporate Governance

Corporate Governance is concerned with holding the

Governance balance between economic and social goals
and between individual and communal goals. The aim is to
align as nearly as possible the interest of individuals,
corporations and society.
“The foundation of any structure of corporate governance
is disclosure. Openness is the basis of public confidence in
the corporate system and funds will flow to centers of
economic activity that inspire trust.” - Sir Adrian Cadbury

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 History of Corporate Governance
 Corporate Governance has existed for as long as
companies have existed
 As a field of study, contemporary corporate
governance exists for less than 70 years.
 Sir George Adrian Cadbury is the pioneer in
raising awareness and stimulating the debate on
Corporate Governance

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 George Adrian Cadbury
 Sir George Adrian Hayhurst Cadbury was an English
businessman and former chairman of Cadbury and
Cadbury Schweppes for 24 years. (1965-1989).
 He was a Director of the Bank of England from
“1970–1994” and of IBM from “1975-1994”.
 He was chairman of the UK Committee on the
Financial Aspects of Corporate Governance.
 He produced the Cadbury Report, in 1992, a code
of best practice which served as a basis for reform
of corporate governance around the world.
 Cadbury’s report advocated a clear division of
responsibilities at the head of a company so that
no one individual had too much power

(15 April 1929 – 3 September 2015)

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Corporate Governance Parties

1. Shareholders : those that own the company.

2. Directors : Guardians of the Company’s assets

for the Shareholders.

3. Managers: who use the company’s assets.

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Managing the Relationship Between
Shareholders, Board and Management

Board of
Shareholders Management
Directors

Companies Act and other Contract

rules and regulations
Importance of Corporate Governance

Corporate Scandals:

1. Lehman Brothers:
Lehman Brothers was a global financial services
firm that collapsed in 2008, triggering the
global financial crisis. The firm had been
involved in risky lending practices, such as
subprime mortgages, and had used off-balance
sheet transactions and accounting tricks to
conceal its true financial position. When the
housing market crashed, Lehman Brothers was
unable to meet its obligations and filed for 9

bankruptcy.
 Importance of Corporate Governance

Corporate Scandals:

2. Volkswagen emissions scandals

“dieselgate scandal”:
Software was installed in diesel vehicles to
detect if an emission test is ongoing and
reduce nitrogen oxide emissions than the
actual on the road emission which was 40
times more than the legal limit.

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 Importance of Corporate Governance

Corporate Scandals:

3. Enron: Using Complex and deceptive financial

statements to hide the losses and
debts.
4. WorldCom: Overstatement of profits by $3.8
billion
5. Adelphia Communications: illegal loan to
founder
6. Waste Management Inc.: Overstatement of
earnings by $17 billion over 6 years
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Four Pillars of Corporate Governance
“Building a Foundation for Accountable, Transparent,
Responsible and Fair Companies”

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Four Pillars of Corporate Governance
“Building a Foundation for Accountable, Transparent,
Responsible and Fair Companies”

 This means being responsible or

having to answer. Investors are
interested in who will be
responsible for each activity and
accountable when something goes
wrong.
 Management is accountable to the
Board of Directors and the Board of
Directors is accountable to
shareholders. 13
Four Pillars of Corporate Governance
“Building a Foundation for Accountable, Transparent,
Responsible and Fair Companies”

 This refers to the openness of

the company’s operations and
the clarity of its decision-
making processes

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Four Pillars of Corporate Governance
“Building a Foundation for Accountable, Transparent,
Responsible and Fair Companies”

 Involves the Company’s

commitment to conduct its
business in a legal and
ethical manner
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Four Pillars of Corporate Governance
“Building a Foundation for Accountable, Transparent,
Responsible and Fair Companies”

 This involves treating

all stakeholders
equally and making
decisions that are in
the best interest of
the company.

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Corporate Governance Mechanisms

1. Board of Directors:

 Protect the interests of Company’s

shareholders
 The board is often responsible for
reviewing company management
performance and removing individuals
who don't improve the company’s
overall financial performance.

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Corporate Governance Mechanisms

2. Audits:

 Audits are an independent review of a company’s business and

financial operations

 These corporate governance mechanisms ensure that

businesses or organizations follow national accounting
standards, regulations or other external guidelines

 Shareholders, investors, banks and the general public rely on

this information to provide an objective assessment of an
organization.

 Audits also can improve an organization’s standing in the

business environment. Other companies may be more willing
to work with a company that has a strong track record of
operations.
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Corporate Governance Mechanisms

3. Balance of Power

 Balancing power in an organization ensures

that no one individual has the ability to
overextend resources.
 Segregating duties between board members,
directors, managers and other individuals
ensures that each individual’s responsibility is
well within reason for the organization.
 Corporate governance also can separate the
number of functions that one division or
department completes within an organization.

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 Any
Questions?
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