Introduction to Corporate

Governance
MGT 103
What is Corporate Governance?

• a system of rules
• practices by which businesses are directed and
• processes controlled.

• a SYSTEM OF STEWARDSHIP AND CONTROL to guide

organizations in fulfilling their long-term economic,
moral, legal, and social obligations toward their
stakeholders.
 Purpose of Corporate Governance

In simpler terms, the purpose of the corporate governance is to

enhance shareholders’ value and protect the interests of other
stakeholders by improving the corporate performance and
accountability.
 The their
Requires
needsfair
of
enforcement
stakeholders
legal
are
aredone
frameworks in a
served
Rule of Law Transparent Responsive
manner that
within
that are a
follows rules
reasonable
enforced
and
impartially.
timeframe.
regulations.
 institution
results that
members feel is
accountable
meet the
that they
Effective and to
needs
havethose
aof who
the
stake
Inclusiveness Accountability
Efficient company
will be
in it and do
while
affected
making
not feel by
the
its decisions
best use
excluded.
of
or available
actions.
resources.
 What is a Well-governed Organization?

Internal Control
Risk Management internal events
Governance external events

A well-governed organization is one which implements

effective risk management and internal control systems.
 ACCOUNTABILITY
TRANSPARENCY AND FULL DISCLOSURE
Is the board taking responsibility?
Is the board telling what is going on?

GOOD AND EFFECTIVE

GOVERNANCE

CORPORATE CONTROL
Is the board doing the right thing?

Principles of Effective Corporate

Governance