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					FINAL PRESENTATION
OF
MANAGEMENT


    ON
    CORPORATE GOVERNANCE
 GROUP MEMBERS
 Ali Iqbal (Group leader)   MBP-11507
 Nabeel Ahmad Butt          MBP-11539
 Zain Fayyaz Butt           MBP-11510
 Weheb Abid                 MBP-11546
 Amna Khan                  MBP-11505
 Huma Khalid                MBP-11552
HISTORY OF CORPORATE GOVERNANCE

 In 1983 it appeared as the title of a paper
 “In perspective on Management” Earl (1983)
 and in 1984 as the title of report of
 “The American Law Institute” on the
 Principles of Corporate Governance and also
 as the title of a book “Corporate Governance
 – practices, procedures and power” in
 British companies and their board of
 directors…
DEFINITION OF CORPORATE GOVERNANCE

 Corporate Governance means a company in
  a value based manner.
 Corporate Governance is the system by
  which companies are directed & controlled.
EXISTING CORPORATE GOVERNANCE SYSTEM

   EXECUTIVE                      INDEPENDENT
                OWNER DIRECTORS
   DIRECTORS                        DIRECTORS


                   BOARD OF
                   DIRECTORS

                                  SUPERVISORY &
                 MANAGEMENT       ENFORCEMENT
                                   AUTHORITIES


                  CORPORATE



 SHAREHOLDERS    STAKEHOLDERS      CREDITORS
OBJECTIVES

   Enhancement of Shareholders value keeping in
    view the interest of other Stakeholders.

   Key Constituents;
     Share holders
     Board of Directors

     Management
ROLES IN CORPORATE GOVERNANCE

   Gompers et al. (2003) view a corporation as
    a republic. The ultimate authority rests with
    voters (shareholders). These voters elect
    representatives (directors) who delegate
    most decisions to bureaucrats (managers).
FUNCTIONS OF CORPORATE GOVERNANCE

   As in a republic, the actual power sharing
    relations depend upon the specific rules of
    governance. A republic with significant voters
    rights may be called “Democratic” where as
    a republic with significant restrictions to
    voter rights may be called “Dictatorial”
IMPORTANCE OF CORPORATE GOVERNANCE

 High profile corporate scandals where
  directors held accountable
 Questionable behavior of directors
     Excessive  bonuses despite poor performance
     Decisions based on own interests rather than
      the interest of shareholders.
   Good corporate governance practices,
    companies can reduce vulnerability to
    financial crises.
RELATING REPUTATION
   Corporate Reputation is a multi-stakeholder concept
    that is reflected in the perceptions that stakeholders
    have of an organization (Smidtset al., 2001).
   There is much evidence that reputations with different
    stakeholder groups interact. In particular, reputation
    with employees is seen to have an impact on reputation
    with customers and communities (Carmeli, 2005).
   When managing their Corporate Reputation,
    organizations should therefore take account of not only
    their relationships with stakeholders but also monitor
    how stakeholders influence each other (Dutton et al., 1994).
COMPETITION OF CORPORATE GOVERNANCE

   Corporate governance competition among firms
    is based upon the following factors

     Transparency        (true and fair facts & figure)
     Accountability      (responsible)
     Equanimity          (equal treatment)

      It involves letting Investors know how the company
      in which they have invested is utilizing their money?
CORPORATE ETHICS
   Ethics is the integral part of corporate
    governance. The board of directors
    established the code of ethics for
    management and staff which is considered
    to be the tasks. This covers penalty of
    punishment of those who fail to comply, so
    all the staff must follow strictly the
    implication and supervision of the code of
    ethics is applied through the existing
    management system.
CORPORATE ETHICS
   Corporate Ethics involves
     Transparency   among firms decisions an
      shareholders
     Effective board of directors
     Clearly defined responsibilities
     Operate in shareholders interest
     Reliable financial statements
     Fair remuneration
     Open communication
CORPORATE RESPONSIBILITIES

                     CORPORATE
                   RESPONSIBILITY




    CORPORATE        CORPORATE
                                    COPRORATE SOCIAL
     FINANCIAL     ENVIRONMENTAL
                                     RESPONSIBILITY
  RESPONSIBILITY   RESPONSIBILITY
DESCRIPTION OF MODELS & MECHANISM

   Outsider (shareholders) model

   Insider (stakeholders) model
THE OUTSIDER MODEL
 A priority to market regulation
 the owners of firms tend to have a transitory
  interest in the firm
 The absence of close relationships between
  shareholders and management
 the existence of an active `market for corporate
  control´ - takeovers, particularly hostile ones
 the primacy of shareholder rights over those of
  other organisational groups
THE INSIDER MODEL
 The priority to stakeholders control
 The owners of firms tend to have an enduring
  interest in the company
 They often hold positions on the board of
  directors or other senior managerial positions
 The relationships between management and
  shareholders are close and stable
 There is little by way of a market for corporate
  control
 the existence of formal rights for employees to
  influence key managerial decisions
GLOBALIZATION WITH CORPORATE
GOVERNANCE
 Increasing integration of economies around
  the world
 Particularly through trade and financial flows
 Also refers to the movement of (labour) and
  knowledge (technology)
 across international borders.
                                       IMF
SHAREHOLDERS
   Shareholders are the owners of the company. They
    control the company by appointing board of
    directors to act as representatives. Shareholders
    are eligible to make decisions on any of significant
    corporate changes. Therefore the company
    encourages the shareholders to exercise their
    right. Board of directors realizes the importance
    of shareholders, meeting as revealed in the
    policies to facilitate all shareholders equally to
    maintain governance policies.
STAKEHOLDERS

   The board of directors values the right of
    stakeholder that they provide mechanism to
    promote cooperation between the company
    and its stakeholders along with customers,
    employees, suppliers, shareholders, investors,
    creditors, government competitors, external
    auditors etc.
BOARD OF DIRECTORS

   The primary responsibility for administration
    and performance of the company lies with the
    directors. The directors administer the company
    on behalf of shareholders and their powers and
    duties are covered in the statue.
AUDIT COMMITTEE

   The company has the policy that through
    independent directors or audit committee,
    stakeholders can communicate with the board
    any concerns about illegal or unethical
    practices, incorrect financial reporting,
    insufficient internal control etc. so the
    investigation could be carried out and reported
    to the board of Directors.
AUDIT COMMITTEE

   The system by which a company is directed and
    controlled

      Internal Control        Directors must identify

      •Safeguard the assets   •Objectives of the entity
      •Maintain adequate      •Business & Governance
      accounting records      risks
      •Prepare financial      •How to manage those
      statements              risks
ROLE OF AUDITOR IN CORPORATE
GOVERNANCE
   External auditor
     Checks  the integrity of financial statements.
     Form an opinion on companies compliance with
      local corporate governance regulations
     Review the system & controls for weakness

   Internal auditor
     Monitor & controls with in the entity.
     Reports to the directors on effectiveness of
      procedure and control system and report to the
      management about governance policies.
Set of questionable, unethical, and/or illegal actions that a
person or persons within a corporation engage in.

CORPORATE SCANDALS
CONCLUSION

 There is no doubt that a strong correlation
  exists between good governance practices &
  levels of economic development in a nation.
 Good governance leads to good performance
  and create a positive impact on corporate
  performance & national economy.
 Leaders should understand this link and
  respond effectively.
FLOW CHART OF CORPORATE GOVERNANCE

				
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