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Notes To Introduction To Corporate Governance

This document provides an introduction to corporate governance. It defines governance and corporate governance. The major characteristics of good governance are consensus oriented, based on law, equitable and inclusive, accountable, responsive, participatory, effective and efficient, and transparent. Corporate governance is defined as the system of rules and processes by which corporations are directed and controlled. The purposes of corporate governance are to facilitate long-term success and enhance shareholder value while protecting stakeholder interests. The basic objectives are fair treatment of shareholders, increasing shareholder wealth, self-assessment, and transparency. The basic principles of good corporate governance are corporate control, accountability, and transparency.

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Tricia Sta Teresa
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63 views

Notes To Introduction To Corporate Governance

This document provides an introduction to corporate governance. It defines governance and corporate governance. The major characteristics of good governance are consensus oriented, based on law, equitable and inclusive, accountable, responsive, participatory, effective and efficient, and transparent. Corporate governance is defined as the system of rules and processes by which corporations are directed and controlled. The purposes of corporate governance are to facilitate long-term success and enhance shareholder value while protecting stakeholder interests. The basic objectives are fair treatment of shareholders, increasing shareholder wealth, self-assessment, and transparency. The basic principles of good corporate governance are corporate control, accountability, and transparency.

Uploaded by

Tricia Sta Teresa
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Chapter 1 

INTRODUCTION TO CORPORATE GOVERNANCE 

GOVERNANCE – a process whereby elements in society wield power, authority,


and influence, and enact policies and decisions concerning public life and social
upliftment - 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 

MAJOR CHARACTERISTICS OF GOOD GOVERNANCE 

1. Consensus Oriented – best interest of the whole community; broad and long-
term perspective on what is needed for sustainable human development

2. Law – impartial enforcement of legal frameworks; full protection of human rights

3. Equity and Inclusiveness – opportunities for everyone  

4. Accountability – to everyone who may be affected by its decisions or actions

5. Responsiveness – serving the needs of all stakeholders within a


reasonable timeframe 

6. Participation – informed and organized; freedom of association and expression

7. Effectiveness and Efficiency – meeting the needs of the society and making
the best use of resources 

8. Transparency – freely available and directly accessible information;


enough information in easily understandable forms and media 

Efficiency – doing things right 


Effectiveness – doing the right things 
CORPORATE GOVERNANCE – system of rules, practices, and processes by
which business corporations are directed and controlled 
 Greatly contributes to financial market stability and economic growth
 PURPOSES:
 to facilitate effective, entrepreneurial, and prudent management that can
deliver long-term success of the company
 to enhance shareholders’ value and protect the interests of other
stakeholders by improving the corporate performance and accountability 

BASIC OBJECTIVES OF CORPORATE GOVERNANCE 

1. Fair and equitable treatment of shareholders – to safeguard equity among


the shareholders 

2. Increase shareholders’ wealth – to induce potential investors 

3. Self-assessment – to assess their behaviors and actions and to point


out deficiencies, loopholes, and internal issues before they are scrutinized
by regulatory agencies; to limit exposure to regulatory risks and fines 

4. Transparency and full disclosure – to encourage full disclosure of transactions


in the company accounts 

BASIC PRINCIPLES OF GOOD AND EFFECTIVE CORPORATE GOVERNANCE

1. Corporate Control – if the board is doing the right thing 

2. Accountability – if the board is taking responsibility 

3. Transparency and Full Disclosure – if the board is telling what is going on 

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