We think you have liked this presentation. If you wish to download it, please recommend it to your friends in any social system. Share buttons are a little bit lower. Thank you!
Presentation is loading. Please wait.
Published byDeja Shorter
Modified about 1 year ago
© 2005 by Nelson, a division of Thomson Canada Limited. 1 Owner Stakeholders and Corporate Governance Search the Web AFL-CIO sponsors PayWatch. A web site that tracks CEO pay and perks. For more information see:
© 2005 by Nelson, a division of Thomson Canada Limited. 2 Chapter Eighteen Objectives Link the issue of legitimacy to corporate governance Discuss the components of corporate governance and the challenges to “good governance” Describe the general obstacles to achieving properly functioning boards of directors Identify controversies associated with CEOs and boards of directors Explain major changes in boards of directors required to improve corporate governance Discuss the principal ways in which shareholder activism exerts pressure on corporate management
© 2005 by Nelson, a division of Thomson Canada Limited. Chapter Eighteen Outline Legitimacy and Corporate Governance Improving Corporate Governance Summary
© 2005 by Nelson, a division of Thomson Canada Limited. Introduction to Chapter Eighteen The chapter focuses corporate governance and the way it has evolved, by examining the concept of legitimacy and the part that corporate governance plays in establishing the legitimacy of the firm.
© 2005 by Nelson, a division of Thomson Canada Limited. Legitimacy and Corporate Governance Legitimacy is a condition wherein there is a congruence between an organization’s activities and society’s expectations. Legitimation is a dynamic process to perpetuate acceptance.
© 2005 by Nelson, a division of Thomson Canada Limited. Legitimacy and Corporate Governance Micro Level of Legitimacy Adapt operational methods to societal expectations Attempt to change these expectations or norms to a firm’s practices Seek to enhance its legitimacy by having a powerful legitimate base in society
© 2005 by Nelson, a division of Thomson Canada Limited. Legitimacy and Corporate Governance Macro Level of Legitimacy Focus is on business as a whole Subject to ratification –No inherent right to exist
© 2005 by Nelson, a division of Thomson Canada Limited. Legitimacy and Corporate Governance Issue of corporate governance Components of corporate governance –Roles of Four Major Groups –Separation of Ownership from Control
© 2005 by Nelson, a division of Thomson Canada Limited. Legitimacy and Corporate Governance The Four Groups
© 2005 by Nelson, a division of Thomson Canada Limited. Legitimacy and Corporate Governance Separation of Ownership From Control Intended roles Actual roles
© 2005 by Nelson, a division of Thomson Canada Limited. Legitimacy and Corporate Governance Ineffective boards –Rubber stamp boards –CEO dominated boards –Conflict of interest boards Effective boards –Address issues listed above –Use outside directors
© 2005 by Nelson, a division of Thomson Canada Limited. Legitimacy and Corporate Governance Criticism of CEO self-interest still continues after executive earnings became an issue in the ’80s and ’90s and companies still try to link pay to such performance measures as the stock market. Recent research, however, shows that attempts to tightly control CEOs can have dysfunctional consequences. Some corporations, such as Disney, that are dominated by its CEOs, have been highly profitable while having relatively weak boards of directors. The CEO: Pay vs. Performance
© 2005 by Nelson, a division of Thomson Canada Limited. Legitimacy and Corporate Governance Consequences of Mergers, Takeovers and Acquisitions Greenmail Poison pill Golden parachutes Insider trading scandals
© 2005 by Nelson, a division of Thomson Canada Limited. Improving Corporate Governance Changes in boards of directors –Appointing “outside” directors that monitor management more carefully. Use of stronger board committees – Establish audit, nominating, compensation, and public issues committees. Board should “get tough” with the CEO – demand accountability
© 2005 by Nelson, a division of Thomson Canada Limited. Improving Corporate Governance Increased Role for Shareholders Shareholder initiatives –Rise of shareholder activists –Filing of shareholder resolutions Shareholder lawsuits Canada Business Corporations Act (CBCA) Increased activism at corporate annual meetings
© 2005 by Nelson, a division of Thomson Canada Limited. Improving Corporate Governance Corporate Initiatives Full disclosure issue Corporate takeover issue –Candour in public statements on the offer made –Full disclosure of all information –Absence of undue pressure –Sufficient time for shareholders to make considered decisions
© 2005 by Nelson, a division of Thomson Canada Limited. Agency problems Audit committee Board of Directors Charter Compensation committee Corporate governance Employees Full disclosure Golden parachutes Greenmail Inside directors Insider trading Legitimacy Management Nominating committee Selected Key Terms
© 2005 by Nelson, a division of Thomson Canada Limited. Selected Key Terms (cont’d) Outside directors Poison pill Proxy process Public issues committee Public policy committee Separation of ownership from control Shareholder activism Shareholder resolutions Shareholders
1 Corporate Financial Reporting I Lecture 1 Development of Financial Reporting.
Independent Directors and Governance. 2 Agenda Introduction Definition of independent director Selection of independent directors The dual roles that.
© 2005 Pearson Education Canada Inc. BZUPAGES.COM 1-1 Chapter One Overview of Corporate Finance Principles of Corporate Finance Canadian Edition Lawrence.
CORPORATE GOVERNANCE An Introduction 1. Definition 2 According to OECD: Corporate Governance is the system by which business corporations are directed.
Organizational Governance Embracing Internal Audits Role.
1. Recognizing Employee Contributions with Pay After reading this chapter, you should be able to: Describe the fundamental pay programs for recognizing.
What is Corporate Governance? Alison Dillon Kibirige.
CORPORATE GOVERNANCE CHAPTER 1 Presenter’s name Presenter’s title dd Month yyyy.
A Framework for Control COSOs five components of internal control and questions too important to ignore.
Organizational Architecture Chapter Four McGraw-Hill/Irwin Accounting for Decision Making and Control, 5/e © 2006 The McGraw-Hill Companies, Inc.,
Corporate Governance Professor: Clive Vlieland-Boddy.
Learning Objectives 11.1 Describe the advantages and disadvantages of the most common forms of business ownership Identify the stakeholders of a.
FINANCIAL MANAGEMENT I AND II The Scope of Corporate Finance.
DEFINITION OF CORPORATE GOVERNANCE CODE OF PRACTICE BY WHICH A FIRMS MANAGEMENT IS HELD ACCOUNTABLE TO STAKEHOLDERS FOR THE EFFICIENT AND HONEST USE OF.
W. Richard Frederick Governance Consultant. 1. Is the board effective, passive, or dysfunctional? 2. Is the board composition good? Skills, experience,
IP Audit "We're in an object-oriented, outsourced, and open-sourced world, and organizations are anxious to take steps to ensure that the software they.
Copyright 2003 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia by Gay & Simnett Slides prepared by Roger Simnett 1.
Chapter 13 Planning for Electronic Commerce. Learning Objectives In this chapter, you will learn about: Planning electronic commerce initiatives Strategies.
1.2 OBJECTIVES, STAKEHOLDERS AND THE EXTERNAL ENVIRONEMNT HIGHER LEVEL (HL)
Code of Corporate Governance Securities and Exchange Commission Insurance Commission Reported by: Alvin B. Cabrera.
Common Stock and the Investment Banking Process Besley Chapter 16.
School Board Audit Committee Training Module 1 Roles, Responsibilities and Relationships 1.
1 Implications of the Sarbanes-Oxley Act on the Public Sector 2005 NASACT Annual Conference August 15, 2005 Gail Flister Vallieres U.S. Government Accountability.
4-1 Copyright 2009 McGraw-Hill Australia Pty Ltd PPTs t/a Deegan, Financial Accounting Theory 3e Financial Accounting Theory Craig Deegan Chapter 4 International.
Considerations in connection with migrating from a GDR listing to a Premium Listing of Shares on the LSE London Stock Exchange – Russia in Global Markets.
Learning Objectives 6.1 Explain the importance of mission, vision, and value statement and how they set the foundation for the planning process. 6.2 Describe.
1 Recap…. 2 Recent cases of Misconducts Lucent Technologies Adjusted fiscal 2000 revenues by $679 million. Several more names, respected world-over.
Basel Committee Guidance on Corporate Governance for Banks Eurasian Corporate Governance Roundtable Task Force on Corporate Governance of Banks in Eurasia.
Board Governance: A Key to Quality Organizations.
© 2016 SlidePlayer.com Inc. All rights reserved.