Smoking is injurious to health. The document outlines the role media can play in ensuring corporate governance by putting pressure on politicians, managers, and societal norms. It also discusses some of the challenges facing developing economies, such as lack of legal protections for investors, low property rights, and concentration of family-owned corporations. Finally, it compares insider and outsider corporate governance models, noting advantages and disadvantages of each.

2. Smoking is injurious to health

6. RAMA KRISHNA dot A

8.  Outlines
◦ Role of Media in ensuring Corporate Governance
◦ Media can play role in CG by effecting in three
ways;
 Pressure on politicians to go for corporate law reforms
 Pressure on managers to take care of the shareholders
money
 Pressure on managers to take care of the societal
norms

9. ◦ Importance of media
 Can play role even in the absence of legal act
◦ Harms of using advertisement as a media tool.
 Misrepresentation of facts
◦ Media and corporate governance
 Should be broadened rather than just legal and
contractual aspects
 Managers focus should be shareholders but also the
societal norms

10. ◦ Individual as well as institutional investors can use
press to fight with the management.
◦ Selective coverage and media credibility
 Sometimes foreign newspapers are more credible than
the local.
 The issue of credibility can question the investigation
made by the newspaper

11.  Management side deals can increase the query of
credibility.
 A single credible newspaper can’t fight with lots more
incredible newspapers.
◦ Adverse effects of advertising
 dishonesty
 Fear appeals
◦ Positive effects of advertising
 Guidance to children in making decisions
 Developing skills

12.  Outlines
◦ Problems faced by developing and transition or
change economies
 Still in process of basic market institutions to regulate
 Internal owner vs. external owner
 Inflow of new capital is not facilitated
 Lack of property rights, contract violations and self-
dealing are the core issues, not just the owners and
controllers relationship

13.  Act are there but it is hard to implement.
 Judiciary, bureaucracy and regulatory bodies are not
alert to stop corporate misgovernance.
◦ Summary of problems facing these economies
 Low economic growth
 Public sectors dominance i.e. CG is for private sectors
 Lack of effectiveness of privatization
 Lack of awareness among shareholders
 Govt. influence
 Internal owners are more influential than external
owner (no voting powers)
 More concentration toward family-owned corporations.

14.  Lack of legal protection for investors
 No inflow of new capital
 Low property rights and contract laws.
 Lack of well regulatory banking sector
 Exit mechanism, bankruptcy and foreclosure (taking
possession of mortgage property) norms are absent.
 No sound securities market
 Lack of competition
 Corruption and mismanagement
 Non-uniform guidelines by the govt. for all companies

15. ◦ Corporate Governance Models
 Insider system
 Insider own majority of the company shares
 Voting rights
 Power to monitor management
 Keep their investment for long period in a firm
 Support decisions for long period of time
 Dominant owners can use the firms’ assets by colluding
with the management, at the expense of minority
shareholders.
 Irresponsible exercise of power resulting waste resources
and drain company productivity levels.

16.  Outsider system
 Large number of owners hold small number of company
shares
 Can’t monitor management
 Can’t involve in management decisions
 Common law countries (UK, USA) own this system
 Independent board members to monitor managerial
behaviour
 More accountable and less corrupt
 Having dispersed ownership structure with some
weaknesses
 Looking for short term maximization
 Conflicts between directors and owners

17.  Outlines
◦ 1. Introduction
 Monopoly is that one person or company controls 1/3
of the local or national market
 Abuses or mistreatment of monopolies are
 High prices
 Wrong allocation of resources
 Abuse of investors/markets by giving wrong information.
 Preventing or stop inventions
 Economic instability
 Corruption and bribery
 Economic power in the hands of few

18. ◦ Anti-monopoly laws
 Prevents firms to make monopoly
 Prevent unfair price discrimination
◦ Competitive firm is preferred because
 Low prices
 Avoid wastages for competition
 Efficiency
 Consumers’ tastes and preferences

19. ◦ Benefits of competition
 Competition in the product market
 Quality products
 Low prices
 Competition in the capital market
 Relationship of firms and financial institutions
 Economic Power and Political Influence
 Firms can take political influence for their benefits
 Monopolistic market can lead toward the political
influence, would results in bad governance.
 Competition is the only solution.

20. ◦ Challenges to Good Enforcement
 Resources
 Meaningful sanctions
 A real big challenge
◦ Competition Agencies and Competition Policies
 To prevent anti-competitive practices
 To resist the lobbying of interest groups
 Competition policy should be at the top.
 Adequate resources to investigate anti-competitive
practices.