GOVT MAM PG COLLEGE , JAMMU

PRESENTATION ON :

CORPORATE GOVERNANCE

CORPORATE GOVERNANCE

PRESENTED BY : VIRANDER SINGHBBA PART 1

ROLL NO. 29SESSION : 2011-2012

KEY POINT’S :1. INTRODUCTION.2. PRINCIPALS.3. REGULATIONS.4. Mechanisms and

controls.5. Systemic

problems of corporate governance.

INTRODUCTION :“Corporate governance” deals with conflicts of

interests between : The providers of finance and the managers. The shareholders and the stakeholders. Different types of shareholders (mainly the large

shareholder and the minority shareholders) and the prevention or mitigation of these conflicts of interests. 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.

Principles of corporate governance:1. Rights and equitable treatment of

shareholders. 2. Interests of other stakeholders.3. Role and responsibilities of the board.4. Integrity and ethical behavior.5. Disclosure and transparency.

REGULATIONS :1. legal : Corporations are created as legal persons

 by the laws and regulations of a particular jurisdiction. These may vary in many respects between countries, but a corporation's legal person status is fundamental to all jurisdictions and is conferred by statute….”

2. Codes and guidelines : Corporate governance principles and codes have been developed in different countries and issued from stock exchanges, corporations, institutional investors, or associations (institutes) of directors and managers with the support of governments and international organizations……”

Mechanisms and controls :Corporate governance mechanisms and controls are

designed to reduce the inefficiencies that arise from moral hazard and adverse selection.

1. Internal corporate governance controls : a. Monitoring by the board of directors.b. Internal control procedures and internal

auditors.c. Balance of power.d. Remuneration.e. Monitoring by large shareholders.

2. External corporate governance controls :encompass the controls external stakeholders exercise over the

organization. examples : Competition.Debt covenants.Demand for and assessment of performance

information (especially financial statements).Government regulations.Managerial labour market.Media pressure.Takeovers.

3. Financial reporting and the independent auditor :

The board of directors has primary responsibility for the corporation's external financial reporting functions. The Chief Executive Officer and Chief Financial Officer are crucial participants and boards usually have a high degree of reliance on them for the integrity and supply of accounting information. They oversee the internal accounting systems, and are dependent on the corporation's accountants and internal auditors.

Systemic problems of corporate governance :Demand for information.Monitoring costs.Supply of accounting information.

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