Corporate Governance: A brief and simple overview By Wiparat Chuanrommanee, Ph.D. Financed and Banking Department Assumption University Aug. 17, 2009

Wiparat Chuanrommanee, Ph.D.2 Corporate Governance Topics: 1. Corporate Governance and Its Importance 2. International Corporate Governance Practices 3. Corporate Governance in Your Daily Life 3.1 Students 3.2 Workers

Wiparat Chuanrommanee, Ph.D.3 Corporate Governance The set of processes, customs, policies, laws, and institutions affecting the way a corporation is directed, administered or controlled. Corporate governance includes the relationships among many “stakeholders” involved and the goals for which the corporation is governed.

Wiparat Chuanrommanee, Ph.D.4 The Main Relationship Initial phase of business operation Owner (a manager)

Wiparat Chuanrommanee, Ph.D.5 The Main Relationship Later development Managers Shareholders

Wiparat Chuanrommanee, Ph.D.6 The Main Relationship Later development Shareholders Board of directors Managers

Wiparat Chuanrommanee, Ph.D.7 The Main Relationship Later development ManagersShareholders Board of directors Managers “Principal- agent Problem”

Wiparat Chuanrommanee, Ph.D.8 Its Importance Governance shortcomings as a significant explanatory factor in the financial scandals and corporate collapses 1997: Asian financial crisis :The high-profile collapses of a number of large U.S. firms such as Enron, MCI Inc. (WORLDCOM), Xerox and Parmalat : Hamburger Crisis

Wiparat Chuanrommanee, Ph.D.9 Its Importance A sound corporate governance system can help create an environment conducive to the efficient and sustainable growth of the corporate sector, leading to sustainable economic growth. Corporate governance and firm performance Corporate governance and investment decision etc.

Wiparat Chuanrommanee, Ph.D.10 Its Importance Summary: Efficiency and effectiveness Competitiveness Stakeholders confidence Increased shareholder values

Wiparat Chuanrommanee, Ph.D.11 International corporate governance practices 1. Rights and equitable treatment of shareholders - Respect the rights of shareholders - Help shareholders to exercise their rights Ex. Shareholder general meetings

Wiparat Chuanrommanee, Ph.D.12 International corporate governance practices 2. Interests of other stakeholders - Legal and other obligations to all legitimate stakeholders

Wiparat Chuanrommanee, Ph.D.13 International corporate governance practices 3. Role and responsibilities of the board - A range of skills and understanding - Ability to review & challenge management - Sufficient size - Sufficient level of commitment - Appropriate mix of executive and non-executive directors

Wiparat Chuanrommanee, Ph.D.14 International corporate governance practices 4. Integrity and ethical behaviour  - Ethical and responsible decision making  - Compliance and Ethics Programs

Wiparat Chuanrommanee, Ph.D.15 International corporate governance practices 5. Disclosure and transparency  - Integrity of the company's financial report  - Timely and balanced disclosure of material matters

Wiparat Chuanrommanee, Ph.D.16 Corporate governance in your daily life University? -To provide holistic education and training so as to equip students with all-round personal development as well as professional knowledge and skills -To undertake research, emphasizing those of an applied nature which are relevant to industrial, commercial and community needs.

Wiparat Chuanrommanee, Ph.D.17 Corporate governance in your daily life University Governance Academic freedom and autonomy Performance, ethics and professionalism Transparency and public accountability Social responsibility

Wiparat Chuanrommanee, Ph.D.18 Corporate governance in your daily life Students --- Key stakeholders? “How to demonstrate your good university citizenship?” - Follow rule and regulation of the university and act under the right and responsibility of students - Participate in the university activities - Search for the opportunity to build up new knowledge and gain more experiences in your field of study

Wiparat Chuanrommanee, Ph.D.19 Corporate governance in your daily life Workplace? “Responsible Corporate Citizen” Human Rights, Labor, Environment, Anti-Corruption (UN Global Compact, 1999)

Wiparat Chuanrommanee, Ph.D.20 Bibliography Brickley, James A., William S. Klug and Jerold L. Zimmerman, Managerial Economics & Organizational Architecture, ISBN Cadbury, Sir Adrian, "The Code of Best Practice", Report of the Committee on the Financial Aspects of Corporate Governance, Gee and Co Ltd, Cadbury, Sir Adrian, "Corporate Governance: Brussels", Instituut voor Bestuurders, Brussels, Claessens, Stijn, Djankov, Simeon & Lang, Larry H.P. (2000) The Separation of Ownership and Control in East Asian Corporations, Journal of Financial Economics, 58:

Wiparat Chuanrommanee, Ph.D.21 Bibliography Shleifer, A. and R.W. Vishny (1997), A Survey of Corporate Governance. Journal of Finance, 52 (2): University Governance Statement, The Hong Kong Polytechnic University Zhuang, J (1999), Corporate Governance in East Asia and Some Policy Implications, EDBRC (Economic and Development Resource Center) Briefing Notes #14, Asian Development Bank.