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Corporate governance
This document discusses corporate governance and agency theory. It describes how corporate governance is used to establish order between a firm's owners and managers due to the separation of ownership and control in modern corporations. Agency theory holds that conflicts can arise since manager and shareholder goals may not be aligned. Various governance mechanisms exist to help mitigate this issue, such as ownership concentration, boards of directors, executive compensation structures, the market for corporate control, and multidivisional organizational structures. The document provides details on each of these mechanisms.
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Corporate governance
- 1. Transparency 10-1 Chapter 10 CorporateGovernance Michael A. Hitt R. Duane Ireland Robert E. Hoskisson ยฉ1999 South-Western College Publishing
- 2. Transparency 10-2 Competitiveness Chapter 3 Internal Environment Chapter2 External Environment The StrategicThe Strategic ManagementManagement ProcessProcess The StrategicThe Strategic ManagementManagement ProcessProcess Strategic Intent Strategic Mission Strategic Competitiveness Above Average Returns Feedback Strategy Formulation Chapter 4 Business-Level Strategy Chapter 5 Competitive Dynamics Chapter 6 Corporate-Level Strategy Chapter 8 International Strategy Chapter 9 Cooperative Strategies Chapter 7 Acquisitions & Restructuring Strategic Inputs Strategic Actions Strategic Outcomes
- 3. Transparency 10-3 Competitiveness Chapter 3 Internal Environment Chapter2 External Environment The StrategicThe Strategic ManagementManagement ProcessProcess The StrategicThe Strategic ManagementManagement ProcessProcess Strategic Intent Strategic Mission Strategic Competitiveness Above Average Returns Feedback Strategy Formulation Chapter 4 Business-Level Strategy Chapter 5 Competitive Dynamics Chapter 6 Corporate-Level Strategy Chapter 8 International Strategy Chapter 9 Cooperative Strategies Chapter 7 Acquisitions & Restructuring Chapter 10 Corporate Governance Chapter 11 Structure & Control Chapter 12 Strategic Leadership Chapter 13 Entrepreneurship & Innovation Strategic Inputs Strategic Actions Strategic Outcomes
- 4. Transparency 10-4 Corporate Governanceis a relationship amongCorporate Governance is a relationship among stakeholders that is used to determine and control thestakeholders that is used to determine and control the strategic direction and performance of organizationsstrategic direction and performance of organizations Corporate GovernanceCorporate Governance
- 5. Transparency 10-5 Corporate Governanceis a relationship amongCorporate Governance is a relationship among stakeholders that is used to determine and control thestakeholders that is used to determine and control the strategic direction and performance of organizationsstrategic direction and performance of organizations Concerned with identifying ways to ensure thatConcerned with identifying ways to ensure that strategic decisions are made effectivelystrategic decisions are made effectively Corporate GovernanceCorporate Governance
- 6. Transparency 10-6 Used incorporations to establish order between theUsed in corporations to establish order between the firmโs owners and its top-level managersfirmโs owners and its top-level managers Corporate Governance is a relationship amongCorporate Governance is a relationship among stakeholders that is used to determine and control thestakeholders that is used to determine and control the strategic direction and performance of organizationsstrategic direction and performance of organizations Concerned with identifying ways to ensure thatConcerned with identifying ways to ensure that strategic decisions are made effectivelystrategic decisions are made effectively Corporate GovernanceCorporate Governance
- 7. Transparency 10-7 Separation ofOwnership and Managerial ControlSeparation of Ownership and Managerial Control
- 8. Transparency 10-8 Basis ofthe modern corporationBasis of the modern corporation Separation of Ownership and Managerial ControlSeparation of Ownership and Managerial Control
- 9. Transparency 10-9 Basis ofthe modern corporationBasis of the modern corporation Shareholders purchase stock, becoming...Shareholders purchase stock, becoming... Residual ClaimantsResidual Claimants Separation of Ownership and Managerial ControlSeparation of Ownership and Managerial Control
- 10. Transparency 10-10 Basis ofthe modern corporationBasis of the modern corporation - Shareholders reduce risk efficiently by holding- Shareholders reduce risk efficiently by holding diversified portfoliosdiversified portfolios Shareholders purchase stock, becoming...Shareholders purchase stock, becoming... Residual ClaimantsResidual Claimants Separation of Ownership and Managerial ControlSeparation of Ownership and Managerial Control
- 11. Transparency 10-11 Basis ofthe modern corporationBasis of the modern corporation - Shareholders reduce risk efficiently by holding- Shareholders reduce risk efficiently by holding diversified portfoliosdiversified portfolios Shareholders purchase stock, becoming...Shareholders purchase stock, becoming... Residual ClaimantsResidual Claimants Professional managers contract to provide decision-Professional managers contract to provide decision- makingmaking Separation of Ownership and Managerial ControlSeparation of Ownership and Managerial Control
- 12. Transparency 10-12 Basis ofthe modern corporationBasis of the modern corporation - Shareholders reduce risk efficiently by holding- Shareholders reduce risk efficiently by holding diversified portfoliosdiversified portfolios Shareholders purchase stock, becoming...Shareholders purchase stock, becoming... Residual ClaimantsResidual Claimants Professional managers contract to provide decision-Professional managers contract to provide decision- makingmaking Modern public corporation form leads to efficientModern public corporation form leads to efficient specialization of tasksspecialization of tasks Separation of Ownership and Managerial ControlSeparation of Ownership and Managerial Control
- 13. Transparency 10-13 Basis ofthe modern corporationBasis of the modern corporation Professional managers contract to provide decision-Professional managers contract to provide decision- makingmaking - Risk bearing by shareholders- Risk bearing by shareholders - Strategy development and decision-making by- Strategy development and decision-making by managersmanagers - Shareholders reduce risk efficiently by holding- Shareholders reduce risk efficiently by holding diversified portfoliosdiversified portfolios Shareholders purchase stock, becoming...Shareholders purchase stock, becoming... Residual ClaimantsResidual Claimants Modern public corporation form leads to efficientModern public corporation form leads to efficient specialization of tasksspecialization of tasks Separation of Ownership and Managerial ControlSeparation of Ownership and Managerial Control
- 14. Transparency 10-14 Agency TheoryAgencyTheory An agency relationship exists when:An agency relationship exists when:
- 15. Transparency 10-15 An agencyrelationship exists when:An agency relationship exists when: ShareholdersShareholders (Principals)(Principals) Firm OwnersFirm Owners Agency TheoryAgency Theory
- 16. Transparency 10-16 An agencyrelationship exists when:An agency relationship exists when: ShareholdersShareholders (Principals)(Principals) Firm OwnersFirm Owners ManagersManagers (Agents)(Agents) DecisionDecision MakersMakers HireHire Agency TheoryAgency Theory
- 17. Transparency 10-17 An agencyrelationship exists when:An agency relationship exists when: ShareholdersShareholders (Principals)(Principals) Firm OwnersFirm Owners Agency RelationshipAgency Relationship Risk Bearing SpecialistRisk Bearing Specialist (Principal)(Principal) ManagersManagers (Agents)(Agents) DecisionDecision MakersMakers which createswhich creates Managerial Decision-Managerial Decision- Making SpecialistMaking Specialist (Agent)(Agent) HireHire Agency TheoryAgency Theory
- 18. Transparency 10-18 TheThe AgencyAgencyproblem occurs when:problem occurs when: - The desires or goals of the principal and agent conflict- The desires or goals of the principal and agent conflict and it is difficult or expensive for the principal toand it is difficult or expensive for the principal to verify that the agent has behaved appropriatelyverify that the agent has behaved appropriately Agency TheoryAgency Theory
- 19. Transparency 10-19 TheThe AgencyAgencyproblem occurs when:problem occurs when: - The desires or goals of the principal and agent conflict- The desires or goals of the principal and agent conflict and it is difficult or expensive for the principal toand it is difficult or expensive for the principal to verify that the agent has behaved appropriatelyverify that the agent has behaved appropriately Example:Example: Overdiversification because increased productOverdiversification because increased product diversification leads to lower employment riskdiversification leads to lower employment risk for managers and greater compensationfor managers and greater compensation Agency TheoryAgency Theory
- 20. Transparency 10-20 TheThe AgencyAgencyproblem occurs when:problem occurs when: - The desires or goals of the principal and agent conflict- The desires or goals of the principal and agent conflict and it is difficult or expensive for the principal toand it is difficult or expensive for the principal to verify that the agent has behaved appropriatelyverify that the agent has behaved appropriately Solution:Solution: Principals engage in incentive-based performancePrincipals engage in incentive-based performance Example:Example: Overdiversification because increased productOverdiversification because increased product diversification leads to lower employment riskdiversification leads to lower employment risk for managers and greater compensationfor managers and greater compensation contracts, monitoring mechanisms such as thecontracts, monitoring mechanisms such as the board of directors and enforcement mechanismsboard of directors and enforcement mechanisms such as the managerial labor market to mitigatesuch as the managerial labor market to mitigate the agency problemthe agency problem Agency TheoryAgency Theory
- 21. Transparency 10-21 RiskRisk Level ofDiversificationLevel of Diversification Manager and Shareholder Risk and Diversification
- 22. Transparency 10-22 RiskRisk Level ofDiversificationLevel of Diversification Manager and Shareholder Risk and Diversification DominantDominant BusinessBusiness UnrelatedUnrelated BusinessesBusinesses RelatedRelated ConstrainedConstrained RelatedRelated LinkedLinked
- 23. Transparency 10-23 RiskRisk Level ofDiversificationLevel of Diversification Manager and Shareholder Risk and Diversification DominantDominant BusinessBusiness UnrelatedUnrelated BusinessesBusinesses RelatedRelated ConstrainedConstrained RelatedRelated LinkedLinked ShareholderShareholder (Business)(Business) Risk ProfileRisk Profile SS AA
- 24. Transparency 10-24 RiskRisk Level ofDiversificationLevel of Diversification Manager and Shareholder Risk and Diversification DominantDominant BusinessBusiness UnrelatedUnrelated BusinessesBusinesses RelatedRelated ConstrainedConstrained RelatedRelated LinkedLinked ShareholderShareholder (Business)(Business) Risk ProfileRisk Profile ManagerialManagerial (Employment(Employment ) Risk Profile) Risk ProfileSS MM AA BB
- 25. Transparency 10-25 Principals mayengage inPrincipals may engage in monitoringmonitoring behavior to assessbehavior to assess the activities and decisions of managersthe activities and decisions of managers - However, dispersed shareholding makes it difficult and- However, dispersed shareholding makes it difficult and and inefficient to monitor managementโs behaviorand inefficient to monitor managementโs behavior Agency TheoryAgency Theory
- 26. Transparency 10-26 Principals mayengage inPrincipals may engage in monitoringmonitoring behavior to assessbehavior to assess the activities and decisions of managersthe activities and decisions of managers - However, dispersed shareholding makes it difficult and- However, dispersed shareholding makes it difficult and and inefficient to monitor managementโs behaviorand inefficient to monitor managementโs behavior For example:For example: Boards of Directors have a fiduciaryBoards of Directors have a fiduciary duty to shareholders to monitorduty to shareholders to monitor managementmanagement - However, Boards of Directors are often accused of- However, Boards of Directors are often accused of being lax in performing this functionbeing lax in performing this function Agency TheoryAgency Theory
- 27. Transparency 10-27 Governance MechanismsGovernanceMechanisms Ownership ConcentrationOwnership Concentration Boards of DirectorsBoards of Directors Executive CompensationExecutive Compensation Market for Corporate ControlMarket for Corporate Control Multidivisional Organizational StructureMultidivisional Organizational Structure
- 28. Transparency 10-28 Ownership ConcentrationOwnershipConcentration Governance MechanismsGovernance Mechanisms
- 29. Transparency 10-29 Ownership ConcentrationOwnershipConcentration - Large block shareholders have a strong incentive to- Large block shareholders have a strong incentive to monitor management closelymonitor management closely Governance MechanismsGovernance Mechanisms
- 30. Transparency 10-30 Ownership ConcentrationOwnershipConcentration - Large block shareholders have a strong incentive to- Large block shareholders have a strong incentive to monitor management closelymonitor management closely - Their large stakes make it worth their while to spend- Their large stakes make it worth their while to spend time, effort and expense to monitor closelytime, effort and expense to monitor closely Governance MechanismsGovernance Mechanisms
- 31. Transparency 10-31 Ownership ConcentrationOwnershipConcentration monitor management closelymonitor management closely time, effort and expense to monitor closelytime, effort and expense to monitor closely - Large block shareholders have a strong incentive to- Large block shareholders have a strong incentive to - Their large stakes make it worth their while to spend- Their large stakes make it worth their while to spend - They may also obtain Board seats which enhances- They may also obtain Board seats which enhances their ability to monitor effectively (although financialtheir ability to monitor effectively (although financial institutions are legally forbidden from directly holdinginstitutions are legally forbidden from directly holding board seats)board seats) Governance MechanismsGovernance Mechanisms
- 32. Transparency 10-32 Boards ofDirectorsBoards of Directors Governance MechanismsGovernance Mechanisms
- 33. Transparency 10-33 Boards ofDirectorsBoards of Directors - Insiders- Insiders - Related Outsiders- Related Outsiders - Outsiders- Outsiders Governance MechanismsGovernance Mechanisms
- 34. Transparency 10-34 Boards ofDirectorsBoards of Directors - Review and ratify important decisions- Review and ratify important decisions - Insiders- Insiders - Related Outsiders- Related Outsiders - Outsiders- Outsiders Governance MechanismsGovernance Mechanisms
- 35. Transparency 10-35 Boards ofDirectorsBoards of Directors - Review and ratify important decisions- Review and ratify important decisions - Set compensation of CEO and decide when to- Set compensation of CEO and decide when to replace the CEOreplace the CEO - Insiders- Insiders - Related Outsiders- Related Outsiders - Outsiders- Outsiders Governance MechanismsGovernance Mechanisms
- 36. Transparency 10-36 Boards ofDirectorsBoards of Directors - Review and ratify important decisions- Review and ratify important decisions - Set compensation of CEO and decide when to- Set compensation of CEO and decide when to replace the CEOreplace the CEO - Lack contact with day to day operations- Lack contact with day to day operations - Insiders- Insiders - Related Outsiders- Related Outsiders - Outsiders- Outsiders Governance MechanismsGovernance Mechanisms
- 37. Transparency 10-37 Recommendations formore effectiveRecommendations for more effective Board GovernanceBoard Governance Governance MechanismsGovernance Mechanisms
- 38. Transparency 10-38 Recommendations formore effectiveRecommendations for more effective Board GovernanceBoard Governance - Increase diversity of board members backgrounds- Increase diversity of board members backgrounds - Strengthen internal management and accounting- Strengthen internal management and accounting control systemscontrol systems - Establish formal processes for evaluation of the- Establish formal processes for evaluation of the boardโs performanceboardโs performance Governance MechanismsGovernance Mechanisms
- 39. Transparency 10-39 Executive CompensationExecutiveCompensation Governance MechanismsGovernance Mechanisms
- 40. Transparency 10-40 Salary, Bonuses,Long term incentive compensationSalary, Bonuses, Long term incentive compensation Executive CompensationExecutive Compensation Governance MechanismsGovernance Mechanisms
- 41. Transparency 10-41 Salary, Bonuses,Long term incentive compensationSalary, Bonuses, Long term incentive compensation - Executive decisions are complex and non-routine- Executive decisions are complex and non-routine - Many factors intervene making it difficult to establish- Many factors intervene making it difficult to establish for outcomesfor outcomes how managerial decisions are directly responsiblehow managerial decisions are directly responsible Executive CompensationExecutive Compensation - In addition, stock ownership (long-term incentive- In addition, stock ownership (long-term incentive market changes which are partially beyond their controlmarket changes which are partially beyond their control compensation) makes managers more susceptible tocompensation) makes managers more susceptible to Governance MechanismsGovernance Mechanisms
- 42. Transparency 10-42 Salary, Bonuses,Long term incentive compensationSalary, Bonuses, Long term incentive compensation - Executive decisions are complex and non-routine- Executive decisions are complex and non-routine - Many factors intervene making it difficult to establish- Many factors intervene making it difficult to establish for outcomesfor outcomes how managerial decisions are directly responsiblehow managerial decisions are directly responsible Executive CompensationExecutive Compensation - In addition, stock ownership (long-term incentive- In addition, stock ownership (long-term incentive market changes which are partially beyond their controlmarket changes which are partially beyond their control compensation) makes managers more susceptible tocompensation) makes managers more susceptible to Incentive systems do not guarantee that managersIncentive systems do not guarantee that managers make the โrightโ decisions, but they do increase themake the โrightโ decisions, but they do increase the likelihood that managers will do the things for whichlikelihood that managers will do the things for which they are rewardedthey are rewarded Governance MechanismsGovernance Mechanisms
- 43. Transparency 10-43 Multidivisional OrganizationalStructureMultidivisional Organizational Structure Governance MechanismsGovernance Mechanisms
- 44. Transparency 10-44 Designed tocontrol managerial opportunismDesigned to control managerial opportunism Multidivisional Organizational StructureMultidivisional Organizational Structure Governance MechanismsGovernance Mechanisms
- 45. Transparency 10-45 Designed tocontrol managerial opportunismDesigned to control managerial opportunism - Corporate office and Board monitor business-unit- Corporate office and Board monitor business-unit - Increased managerial interest in wealth maximization- Increased managerial interest in wealth maximization managersโ strategic decisionsmanagersโ strategic decisions Multidivisional Organizational StructureMultidivisional Organizational Structure Governance MechanismsGovernance Mechanisms
- 46. Transparency 10-46 Designed tocontrol managerial opportunismDesigned to control managerial opportunism - Corporate office and Board monitor managersโ- Corporate office and Board monitor managersโ - Increased managerial interest in wealth maximization- Increased managerial interest in wealth maximization strategic decisionsstrategic decisions Multidivisional Organizational StructureMultidivisional Organizational Structure Governance MechanismsGovernance Mechanisms M-form structure does not necessarily limit corporate-M-form structure does not necessarily limit corporate- level managersโ self-serving actionslevel managersโ self-serving actions
- 47. Transparency 10-47 Designed tocontrol managerial opportunismDesigned to control managerial opportunism - Corporate office and Board monitor managersโ- Corporate office and Board monitor managersโ - Increased managerial interest in wealth maximization- Increased managerial interest in wealth maximization strategic decisionsstrategic decisions Multidivisional Organizational StructureMultidivisional Organizational Structure Governance MechanismsGovernance Mechanisms M-form structure does not necessarily limit corporate-M-form structure does not necessarily limit corporate- - May lead to greater rather than less diversification- May lead to greater rather than less diversification level managersโ self-serving actionslevel managersโ self-serving actions
- 48. Transparency 10-48 Designed tocontrol managerial opportunismDesigned to control managerial opportunism - Corporate office and Board monitor managersโ- Corporate office and Board monitor managersโ - Increased managerial interest in wealth maximization- Increased managerial interest in wealth maximization strategic decisionsstrategic decisions Multidivisional Organizational StructureMultidivisional Organizational Structure Governance MechanismsGovernance Mechanisms M-form structure does not necessarily limit corporate-M-form structure does not necessarily limit corporate- - May lead to greater rather than less diversification- May lead to greater rather than less diversification Broadly diversified product lines makes it difficult forBroadly diversified product lines makes it difficult for top-level managers to evaluate the strategic decisionstop-level managers to evaluate the strategic decisions of divisional managersof divisional managers level managersโ self-serving actionslevel managersโ self-serving actions
- 49. Transparency 10-49 Market forCorporate ControlMarket for Corporate Control Governance MechanismsGovernance Mechanisms
- 50. Transparency 10-50 Market forCorporate ControlMarket for Corporate Control Operates when firms face the risk of takeover whenOperates when firms face the risk of takeover when they are operated inefficientlythey are operated inefficiently Governance MechanismsGovernance Mechanisms
- 51. Transparency 10-51 Market forCorporate ControlMarket for Corporate Control Operates when firms face the risk of takeover whenOperates when firms face the risk of takeover when they are operated inefficientlythey are operated inefficiently - Changes in regulations have made hostile takeovers difficult- Changes in regulations have made hostile takeovers difficult - Many firms began to operate more efficiently as a result of- Many firms began to operate more efficiently as a result of - The 1980s saw active market for corporate control, largely- The 1980s saw active market for corporate control, largely as a result of available pools of capital (junk bonds)as a result of available pools of capital (junk bonds) the โthreatโ of takeover, even though the actual incidencethe โthreatโ of takeover, even though the actual incidence of hostile takeovers was relatively smallof hostile takeovers was relatively small Governance MechanismsGovernance Mechanisms
- 52. Transparency 10-52 Market forCorporate ControlMarket for Corporate Control Operates when firms face the risk of takeover whenOperates when firms face the risk of takeover when they are operated inefficientlythey are operated inefficiently The market for corporate control acts as an importantThe market for corporate control acts as an important source of discipline over managerial incompetence andsource of discipline over managerial incompetence and wastewaste - Changes in regulations have made hostile takeovers difficult- Changes in regulations have made hostile takeovers difficult - Many firms began to operate more efficiently as a result of- Many firms began to operate more efficiently as a result of - The 1980s saw active market for corporate control, largely- The 1980s saw active market for corporate control, largely as a result of available pools of capital (junk bonds)as a result of available pools of capital (junk bonds) the โthreatโ of takeover, even though the actual incidencethe โthreatโ of takeover, even though the actual incidence of hostile takeovers was relatively smallof hostile takeovers was relatively small Governance MechanismsGovernance Mechanisms
- 53. Transparency 10-53 International CorporateGovernanceInternational Corporate Governance GermanyGermany
- 54. Transparency 10-54 GermanyGermany Owner andmanager are often the same in private firmsOwner and manager are often the same in private firms Public firms often have a dominant shareholder too,Public firms often have a dominant shareholder too, frequently a bankfrequently a bank International Corporate GovernanceInternational Corporate Governance
- 55. Transparency 10-55 GermanyGermany Owner andmanager are often the same in private firmsOwner and manager are often the same in private firms Medium to large firms have a two-tiered boardMedium to large firms have a two-tiered board Public firms often have a dominant shareholder too,Public firms often have a dominant shareholder too, frequently a bankfrequently a bank - Vorstand monitors and controls managerial decisions- Vorstand monitors and controls managerial decisions - Aufsichtsrat selects the Vorstand- Aufsichtsrat selects the Vorstand - Employees, union members and shareholders appoint- Employees, union members and shareholders appoint members to the Aufsichtsratmembers to the Aufsichtsrat International Corporate GovernanceInternational Corporate Governance
- 56. Transparency 10-56 GermanyGermany Owner andmanager are often the same in private firmsOwner and manager are often the same in private firms Medium to large firms have a two-tiered boardMedium to large firms have a two-tiered board Public firms often have a dominant shareholder too,Public firms often have a dominant shareholder too, frequently a bankfrequently a bank - Vorstand monitors and controls managerial decisions- Vorstand monitors and controls managerial decisions - Aufsichtsrat selects the Vorstand- Aufsichtsrat selects the Vorstand - Employees, union members and shareholders appoint- Employees, union members and shareholders appoint members to the Aufsichtsratmembers to the Aufsichtsrat Frequently there is less emphasis on shareholder valueFrequently there is less emphasis on shareholder value than in U.S. firms, although this may be changingthan in U.S. firms, although this may be changing International Corporate GovernanceInternational Corporate Governance
- 57. Transparency 10-57 JapanJapan International CorporateGovernanceInternational Corporate Governance
- 58. Transparency 10-58 JapanJapan Obligation, โfamilyโand consensus are important factorsObligation, โfamilyโ and consensus are important factors International Corporate GovernanceInternational Corporate Governance
- 59. Transparency 10-59 JapanJapan Keiretsus arestrongly interrelated groups of firms tiedKeiretsus are strongly interrelated groups of firms tied together by cross-shareholdingstogether by cross-shareholdings Banks (especially โmain bankโ) are highly influentialBanks (especially โmain bankโ) are highly influential with firmโs managerswith firmโs managers Obligation, โfamilyโ and consensus are important factorsObligation, โfamilyโ and consensus are important factors International Corporate GovernanceInternational Corporate Governance
- 60. Transparency 10-60 JapanJapan Keiretsus arestrongly interrelated groups of firms tiedKeiretsus are strongly interrelated groups of firms tied together by cross-shareholdingstogether by cross-shareholdings Banks (especially โmain bankโ) are highly influentialBanks (especially โmain bankโ) are highly influential with firmโs managerswith firmโs managers - Powerful government intervention- Powerful government intervention - Close relationships between firms and government sectors- Close relationships between firms and government sectors - Passive and stable shareholders who exert little control- Passive and stable shareholders who exert little control - Virtual absence of external market for corporate control- Virtual absence of external market for corporate control Other characteristics:Other characteristics: Obligation, โfamilyโ and consensus are important factorsObligation, โfamilyโ and consensus are important factors International Corporate GovernanceInternational Corporate Governance
- 61. Transparency 10-61 It isimportant to serve the interests of multipleIt is important to serve the interests of multiple stakeholder groupsstakeholder groups Corporate Governance and Ethical BehaviorCorporate Governance and Ethical Behavior
- 62. Transparency 10-62 Shareholders areone important stakeholder group,Shareholders are one important stakeholder group, which are served by the Board of Directorswhich are served by the Board of Directors It is important to serve the interests of multipleIt is important to serve the interests of multiple stakeholder groupsstakeholder groups Corporate Governance and Ethical BehaviorCorporate Governance and Ethical Behavior
- 63. Transparency 10-63 Product marketstakeholders (customers, suppliers andProduct market stakeholders (customers, suppliers and host communities) and Organizational stakeholdershost communities) and Organizational stakeholders (managerial and non-managerial employees) are also(managerial and non-managerial employees) are also important stakeholder groupsimportant stakeholder groups Shareholders are one important stakeholder group,Shareholders are one important stakeholder group, which are served by the Board of Directorswhich are served by the Board of Directors It is important to serve the interests of multipleIt is important to serve the interests of multiple stakeholder groupsstakeholder groups Corporate Governance and Ethical BehaviorCorporate Governance and Ethical Behavior
- 64. Transparency 10-64 Product marketstakeholders (customers, suppliers andProduct market stakeholders (customers, suppliers and host communities) and Organizational stakeholdershost communities) and Organizational stakeholders (managerial and non-managerial employees) are also(managerial and non-managerial employees) are also important stakeholder groupsimportant stakeholder groups Shareholders are one important stakeholder group,Shareholders are one important stakeholder group, which are served by the Board of Directorswhich are served by the Board of Directors Although controversial, some believe that ethicallyAlthough controversial, some believe that ethically responsible firms should introduce governanceresponsible firms should introduce governance mechanisms which serve all stakeholdersโ interestsmechanisms which serve all stakeholdersโ interests It is important to serve the interests of multipleIt is important to serve the interests of multiple stakeholder groupsstakeholder groups Corporate Governance and Ethical BehaviorCorporate Governance and Ethical Behavior