The significance of corporate governance in a globalized
1. PRESENTED
BY
SCOTT ODIGIE
TO
COLLEGE OF SOCIAL
AND MANAGEMENT
SCIENCES STUDENTS
WEEK
OF
ACHIEVERS
UNIVERSITY, OWO
ON THE SIGNIFICANCE OF CORPORATE
27TH JUNE, 2012 GOVERNANCE IN A GLOBALISED
ECONOMY
2. OUTLINE
1. Definition: Corporate Governance
2. Corporate governance as an integral constituent of nature.
3. Overview
4. Principles of corporate governance
5. Global economic significance of corporate governance
6. Conclusion
4. Corporate governance is a term that refers broadly to the
rules, processes or laws by which businesses are operated,
regulated and controlled. The term can refer to internal
factors defined by the officers, stockholders or constitution
of a corporation, as well as to external factors such as
consumer groups, clients and government regulations.
It could also be the interaction between various participants
(shareholders, board of directors, and company’s
management) in shaping corporation’s performance and the
way it is proceeding towards.
6. Corporate governance is an indispensable integral
constituent of creation for man’s success in all forms of
endeavor. Lets take a look at some illustrations:
Human physiology: why do we think that there are
anomalies, disorders and various medical symptoms in the
human body? It is as a result certain breach in the
principles for the effective and efficient function of the
body system.
Personal success: why do we think some students are
more productive than some? Most of it is due to the
absence of certain principles of success that have been
ignored. Why do we also think some personnel are more
productive than some? More of it is due to lack of
adherence to the laws of success.
7. Marital success: every marriage relationship that actually
emerges a success, operates on corporate governance.
8. Economic classification: this classification is based on
Gross Domestic Product. That is, the total value of goods
and services produced in a country over a period of time. I
have discovered that the most corrupt nations of the world
are found in third world and in the sequence respectively.
Third-world nations are found in Africa, Asia and the
Caribbean. Examples of second world nations are:
Malaysia, Indonesia etc. examples of first-world nations
are: United States of America, United Kingdom, France,
etc.
10. The significance of corporate governance is now
recognized both for national development and as part of the
international financial architecture and is neatly
encapsulated in the words of the world bank that the proper
governance of companies will become crucial to the world
economy as the proper governance of countries. Research
has shown also that good corporate governance can
improve standards in business, encourage foreign
investment and lead to improve performance by companies.
11. The relationship between the owners and the managers in an
organization must be healthy and there should be no conflict
between the two.
Corporate governance deals with the manner the providers
of finance guarantee themselves of getting a fair return on
their investment. Corporate governance clearly distinguishes
between the owners and the managers.
Corporate governance ensures transparency which ensures
strong and balanced economic development. This also
ensures that the interests of all shareholders (majority as
well as minority shareholders) are safe guarded. It ensures
that all shareholders fully exercise their rights and that the
organization fully recognizes their rights.
12. Much of the contemporary interest in corporate governance
is concerned with mitigation of conflicts of interests between
stakeholders. Ways of mitigation or preventing these conflicts
of interests include the processes, customs, policies, laws, and
institutions which have impact on the way a company is
controlled. An important theme of corporate governance is the
nature and extent of accountability of people in the business
and mechanisms that try to decrease the principal agent
problem.
Well defined and enforced corporate governance provides a
structure that at least in theory,
13. works for the benefit of everyone concerned by ensuring
that the enterprise adheres to accepted ethical standards and
best practices as well as to formal laws. To this end,
organizations have been formed at the regional, national
and global levels.
In recent years, corporate governance has received
increased attention because of high-profile scandals
involving abuse of corporate power and in some cases,
alleged criminal activity by corporate officers. An integral
part of an effective corporate governance regime includes
provisions for criminal prosecution of individuals who
conduct unethical or illegal acts on the name of the
enterprise.
15. 1
Rights and equitable treatment of shareholders:
organizations should respect the rights of shareholders and
help them to exercise their rights by openly and effectively
communicating information and by encouraging
shareholders to participate in general meetings.
16. 2
Interest of other stakeholders: organizations should
recognize that they have legal contractual, social, and
market driven obligations to non-shareholder stakeholders,
including employees, investors, creditors, suppliers, local
communities, customers and policy makers.
17. 3
Role and responsibilities of the board: the board needs
sufficient relevant skills and understanding to review and
challenge management performance. It also needs adequate
size and appropriate levels of independence and
commitment.
18. 4
Integrity and ethical behavior: integrity should be a
fundamental requirement in choosing corporate officers and
board members. Organizations should develop a code of
conduct for their directors and executives that promote
ethical and responsible decision making.
19. 5
Disclosure and transparency: organizations should clarify
and make public know the roles and responsibilities of the
board and management to provide stakeholders with a level
of accountability. They should also implement procedures to
independently verify and safeguard the integrity of the
company’s financial reporting. Disclosure of material
matters concerning the organization should be timely and
balanced to ensure that all investors have access to clear
factual information.
23. Corporate governance is not just one of the designs of
mitigation of man for business efficiency and effectiveness,
but an indispensable integral constituent of human existence
in all works of life. Thank you for listening.