Professional Documents
Culture Documents
Topics:
• Definitions of CG
• The scope of CG
• The significance of constitutions for corporate entities
• The difference between governance & management
• The performance & conformance aspects of governance
• Alternative board structures
All corporate entities need a
governing body
Other sources of
finance Institutional investors
Stock
CG activists
Markets
Societal Market
influences and Investment
analysts intermediaries
other Providers of
stakeholders debt capital
Shareholders
i.e. members
Government Governing
and other body -
corporate board of
regulators directors External
Contractual auditors
stakeholders:
Suppliers, Management
Customers
bankers
The members
Governing body
Corporate
entity
Management
Management involves an
organisational hierarchy
Governance is different from
management
governance
management
Corporate Governance Defined
ED
Co. Secretary
Investment (Compliance
Manager Officer)
General
Manager
Corporate Governance Defined
Outward looking
Accountability Strategy formulation
Supervising
executive activities Policy making
Inward looking
Outward
looking Providing Strategy
Accountability Formulation
Supervising
executive activities Policy making
Corporate Governance Defined
• Two-tier board
Supervisory board
Management board
Corporate Governance Defined
O
O O
O O
O = executive
directors
Corporate Governance Defined
N N
O
O executive directors O
N non-executive directors O O O
Corporate Governance Defined
N
N N
N N
O
N non-executive directors O O
O executive directors Critique of too much
power CEO
Corporate Governance Defined
N non-executive
directors
Directors & board architecture
Topics:
Context:
• Differences in ownership patterns
• highly dispersed with no dominant owner
• concentrated with single or block holders dominant
• Markets for corporate control
• Financing
Culture influences CG
Models of Corporate Governance
CG – convergence or differentiation?
Forces for convergence
• CG codes of good practice around the world
• securities regulators
• international accounting standards
• global concentration of audit practices
• globalisation of companies
• raising capital on overseas exchanges
• international institutional investors
• private equity funding
• cross-border merger of stock exchanges
• research publications, conferences & professional journals
Models of Corporate Governance
CG – convergence or differentiation?
Forces for differentiation
• legal differences in company law, contract law &
bankruptcy law
• different standards in legal processes
• stock market differences – capitalisation, liquidity
• differences in the market for control
• differences in ownership structures
• historical differences & expectations
• cultural differences
Models of Corporate Governance