Corporate Governance Part 1

CORPORATE GOVERNANCE
Lovely May Burgos

CORPORATION
A corporation is an organization
created (incorporated) by a
group of shareholders who have
ownership of the corporation.
The elected board of directors
appoint and oversee
management of the corporation .
GOVERNANCE
Oxford English dictionary defines
"governance "as the act, manner , fact
or function of governing sway control.
The word has Latin origins that suggest
the notion of 'steering". it deals with
the processes and systems by which
an organization or society operates.
Governance can be used with
reference to all kind of organizational
structure
(MEANING)CORPORATE
GOVERNANCE
 Corporate governance is
the way, a company
manages itself in order to
ensure fair and equitable
returns to all shareholders
and other financial
stakeholders.
(DEFINITION) CORPORATE
GOVERNANCE
Corporate Governance may be defined
as a set of systems, processes and
principles which ensure that a company
is governed in the best interest of all
stakeholders and used to direct and
manage the business and affairs in a
company towards enhancing business
prosperity and corporate accountability
with ultimate objective of realizing long
term shareholders.
CONCEPT
It involves a set of relationships
between a company’s management, its
board, its shareholders and other
stakeholders;• It deals with prevention
or mitigation of the conflict of interests
of stakeholders. Ways of mitigating or
preventing these conflicts of interests
include the processes, customs, policies,
laws, and institutions which have impact
on the way a company is controlled
OBJECTIVES
IMPROVEMENT OF
SHAREHOLDERS VALUE
CONCOUS CONSIDERATION OF
THE INTEREST OF OTHER
STAKEHOLDERS
GOOD GOVERNANCE
PROMOTES
TRANSPARENCY
means openness, a willingness by
the company to provide clear
information to shareholders and
other stakeholders. For example,
transparency refers to the
openness and willingness to
disclose financial performance
figures which are truthful and
accurate.
ACCOUNTABILITY
Corporate accountability refers to

the obligation and responsibility to
give an explanation or reason for
the company’s actions and
conduct.
PRUDENCE
is defined within the Code
of Governance as "care, caution
and good judgment as well as wisdom
in looking ahead." It is the management
committee/board's responsibility to
safeguard the interests of the charity
through good planning and
management of finances, activity and
risk.
Benefits of Corporate
Governance
REDUCED VULNERABILITY
 MARKETABILITY
CREDIBILITY
VALUATION
GOALS OF FINANCIAL
MANAGEMENT
Assuming that e restrict
ourselves to for profit
businesses, the goal of
financial management is to
make money or add value to
the owners.
If we were to consider possible
financial goal, we might come up with
some ideas like the following:
• To survive
• To avoid financial distress and bankruptcy
• To beat the competition
• To maximize sales and market share
• To minimize cost
• To maximize profit
• To maintain steady earning growth
Managerial Compensation
Management will frequently have a significant
economic incentive to increase share value for two
reasons: First, Managerial compensation,
particularly at the top I usually tied at to financial
performance in general and oftentimes to share
value in particular.
Example: Managers are frequently given the options to
buy stock at a bargain price. The more the stock is
worth, the more valuable is the option. In fact,
options are increasingly being used to motivate
employees of all types, not just top management.
The Second incentive mangers have relates to job
prospect.
CONTROL IN THE FIRM
Control of the firm
ultimately rests with
stockholders.
CONFLICT ON INTEREST
Potential and agent have
diverse interest, and the
separation of ownership and
control provides potential
for different interest to
surface.
Managerial Opportunism
Refers to the act by the agent
of taking advantage on things
that are within his control by
virtue of the rights given to him
by the principal.
THANK
YOU!!!!!!!!

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CORPORATE GOVERNANCE

Lovely May Burgos

Corporate accountability refers to

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