Corporate Governance

1. Diya Sen
Roll no: 50
Paper- 202
Sem:2nd Sem
Department of Commerce
Assam University, Silchar
Corporate Governance

2. Presentation Outline
 Introduction- Corporate Governance
 Advantages of Corporate Governance
 Disadvantages of Corporate Governance
 Ethical Aspects of Corporate Governance
 Critical Analysis of Stakeholders Theory
 Critical Analysis of Agency Theory
 Corporate Culture
 Whistleblower Protection
 Conclusion

3. INTRODUCTION
Corporate governance is the system of rules, practices and
processes by which a company is directed and controlled.
Corporate governance essentially involves balancing the
interests of a company’s many stakeholders such as
shareholders, management, customers ,suppliers,
financiers, government and the community.
Strong pillar of Corporate Governance
Transparency
Fairness
Accountability

4. ADVANTAGES OF CORPORATE
GOVERNANCE
1. ENHANCED PERFORMANCE
2. ACCESS TO CAPITAL

5. DISADVANTAGES OF CORPORATE
GOVERNANCE
1. Easily Corruptible
2. Cost of Monitoring

6. Ethical Aspects of Corporate Governance
Governing
a business
ethically is
manifested
through….
Board
behaviour
s
Board
structure
s &
process
es
The
purpose,
strategy &
vision for
the
business
Values &
standard
s
Structures
&
procedure
s for
oversight
& control

7. The figure shown above is illustrated below:
1.Board Behaviours:
The board members carry out their duties in a way
that reflects ethical values such as integrity,
respect, fairness and honesty.
2.Board structures & processes:
Which facilitate ethical behaviours,avoid unethical
ones(such as unmanaged conflicts of interest)
and ensure proper accountability-e.g
appropriate board composition, committees,
decision-making procedures.

8. 3. The purpose, strategy & vision for the business:
The board sets the purpose for the business and
what the business stands for; its strategic
decisions reflect the business’s core values.
4. Values & standards:
The board articulates and ensures the
implementation of the standards of behaviour it
expects for business practice, the way business
will be done and its role in society(including ethics
programmes and CSR initatives)
5. Structures & procedures for oversight & control:
Mechanisms of delegation and control are
conducive to ethical business practice.

9. CRITICAL ANALYSIS OF STAKEHOLDERS
THEORY
Definition:
Stakeholder theory suggests that shareholders, aka
financial investors, are one of many groups a
corporation or organization must serve. Under
stakeholder theory,
anyone that is affected by the organization or its
workings in any way is considered a stakeholder,
including employees, customers, suppliers, local
communities, environmental groups,
governmental groups,and more.Stakeholder
theory holds that organizations and corporations
should strive to do right by all these stakeholders
and that in doing so, the organization will achieve
true lasting success.Thus, stakeholder theory

10. Criticism:
 Stakeholder theory focuses on all people who are
or may be affected by the results or decisions of
the entity. However, the view is majorly criticized,
with the management focusing lower on the
entity’s shareholders.
 The shareholders have invested their money to
maximize their returns. The administration is
obliged to keep their interest in focus compared
to others.

11. CRITICAL ANALYSIS OF AGENCY
THEORY
Definition:
Agency theory is a concept that relates to a specific
type of agency relationship that exists between
the shareholders and directors/management of a
company.The shareholders, true owners of the
corporation, as principals, elect the executives to
act and take decisions on their behalf.The aim is
to represent the views of the owners and conduct
operations in their interest.

12. Criticism:
Throughout the relationship, there is a number of
actions and decisions that are made by the agent
on behalf of the principal.The same actions and
decisions are what generates disagreements and
conflict between the two parties.The main causes
of agency problems:
1. When a conflict of interest arises between the
principal and the agent.
2. When the agent is making decisions on behalf
of the principal that is not in the best interest of
each associated party.

13. CORPORATE CULTURE
Corporate Culture refers to the beliefs and
behaviors that determine how a company’s
employees and management interact and handle
outside business transcations. A company’s
culture will be reflected in its dress code,
business hours, office setup, employee benefits,
turnover, hiring decisions, treatment of clients,
client satisfaction and every other aspect of
operations.For instance, corporate culture might
be reflected in the way a corporation hires and
promotes employees, or in its corporate mission
statement.

14. WHISTLEBLOWER PROTECTION
A whistleblower is a person, who could be an
employee of a company,or a government agency,
disclosing information to the public or some
higher authority about any wrongdoing, which
could be in the form of fraud, corruption, etc.
Whistleblower protections are the protections
provided to whistleblowers to enable them to
come forward to report misconduct without fear of
retribution or personal detriment.

15. CONCLUSION
Thus, Corporate governance is the mechanism by
which the agency problems of corporation
stakeholders, including the shareholders,
creditors, management , employees, consumers
and the public at large are framed and sought to
be resolved. It plays an important role for
soothing governance of company.