the etymology of

8/2/2019 The Etymology Of

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National Proverty EradicationProgramme (NAPEP)Case study: Nigeria

Impact and Implementation of the National Eradication Programme (NAPEP)

NOSIRU GAFAR.O F/HD/09/3620039

AKPAN ELIZABETH INI F/HD/09/3620004

OZURUONYE EMEKA F/HD/09/3620090

F/HD/09/3620077

UDOH ENOBONG. H F/HD/09/3620040

ADEBAYO MUDASIRU. M F/HD/09/3620013

OJO FEYISAYO. C F/HD/09/3620014

ODUNSI SEUN. R F/HD/09/3620082

KPAGI THANKGOD. N F/HD/09/3620058

KAREEM ADEOLA. K F/HD/09/3620085

2012

Presented to:

MRS. Ejinwunmi

3/20/2012


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INTRODUCTION

The etymology of governance cornes from a Latin words gubernare and gubernator,

which refer to steering and to the steerer or captain of a ship. The word governance

cornes from the old French gouvernance and means control and the state of being

governed (farrar, 2011).

Corporate governance has succeeded in attracting a good deal of public interest because

of its important for the economic health of corporations and the welfare of society, in

general. However, the concept of corporate governance is defined in several ways

because it potentially covers many activities having direct or indirect influence on the

financial health of corporate entities.

Milton Friedman (2002), an economist and Noble laureate, said that corporate

governance is to conduct the business in accordance with owners or shareholders

desires, which generally will be to make as much money as possible, while conforming

to the basic rules of the society embodied in law and local customs.

The Organization for Economy Cooperation and Development (OECD) (1999) defined

corporate governance as the system by which business corporation are directed and

controlled.

The World Bank (1999) defined corporate governance from tow different perspectives .

A: from the standpoint of a corporation the emphasis is put on the relationship between

the owners, management board and other stakeholders (the employees, customers,

suppliers, investors and communities).

B: from the public policy perspective, corporate governance refers to providing for the

survival, growth and development of the company, and at the same time its

accountability in the exercise of power and control over companies.

Monks and Minow (2001) defined corporate governance as the relationship among

various participant in determining the direction and performance of corporations. The

primary participant are the shareholders, the management, and the board of directors.

Gregory (2001) in her very well done comparison study entitled, International

Comparison of Corporate Governance Guidelines and Codea of Best Practice:

Developed Markets, described corporate governance as the blend of law, regulation,

and appropriate voluntary private-sector practices which enables the corporation to

attract financial and human capital, perform efficiently, and thereby perpetuate itself by


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generating long term economy value for its shareholders, while respecting the interest

of stakeholders and society as a whole.

Olin (2001) said, corporate governance is a board term that encompasses rules and

market practices that determine how companies make decisions, the transparency of

their decision making process, the accountability of their directors, managers and

employees, the information they disclose to investors and the protection of minority

shareholders. From the authors point of view, corporate governance can be defined as

the set of rules and incentives by which the management of a company is directed and

controlled in order to maximize the profitability and long term value of the firm.

Corporate Governance Models around the World

There are many different models of corporate governance around the world. These

differ according to the variety of capitalism in which they are embedded. The Anglo-

American "model" tends to emphasize the interests of shareholders. The coordinated or

multi-stakeholder model associated with Continental Europe and Japan also recognizes

the interests of workers, managers, suppliers, customers, and the community.

Regulation

1. Legal environment - GeneralCorporations 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. This

allows the entity to hold property in its own right without reference to any particular

real person. It also results in the perpetual existence that characterizes the modern

corporation. The statutory granting of corporate existence may arise from general

purpose legislation (which is the general case) or from a statute to create a specific

corporation, which was the only method prior to the 19th century.

In addition to the statutory laws of the relevant jurisdiction, corporations are subject to

common law in some countries, and various laws and regulations affecting business

practices. In most jurisdictions, corporations also have a constitution that provides
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individual rules that govern the corporation and authorize or constrain its decision-

makers. This constitution is identified by a variety of terms; in English-speaking

jurisdictions, it is usually known as the Corporate Charter or the [Memorandum and]

Articles of Association. The capacity of shareholders to modify the constitution of their

corporation can vary substantially.

2. Codes and guidelinesCorporate 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. As a rule, compliance with these governance

recommendations is not mandated by law, although the codes linked to stock exchange

listing requirements may have a coercive effect. For example, companies quoted on the

London, Toronto and Australian Stock Exchanges formally need not follow the

recommendations of their respective codes. However, they must disclose whether they

follow the recommendations in those documents and, where not, they should provide

explanations concerning divergent practices. Such disclosure requirements exert a

significant pressure on listed companies for compliance.

One of the most influential guidelines has been the 1999 OECD Principles of Corporate

Governance. This was revised in 2004. The OECD guidelines are often referenced by

countries developing local codes or guidelines. Building on the work of the OECD,

other international organizations, private sector associations and more than 20 national

corporate governance codes, the United Nations Intergovernmental Working Group of

Experts on International Standards of Accounting and Reporting (ISAR) has produced

their Guidance on Good Practices in Corporate Governance Disclosure. This

internationally agreed benchmark consists of more than fifty distinct disclosure items

across five broad categories:
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Auditing Board and management structure and process Corporate responsibility and compliance Financial transparency and information disclosure Ownership structure and exercise of control rightsThe World Business Council for Sustainable Development WBCSD has done work on

corporate governance, particularly on accountability and reporting, and in 2004

released Issue Management Tool: Strategic challenges for business in the use of

corporate responsibility codes, standards, and frameworks. This document offers

general information and a perspective from a business association/think-tank on a few

key codes, standards and frameworks relevant to the sustainability agenda.

Most codes are largely voluntary. An issue raised in the U.S. since the 2005 Disney

decision in 2005 is the degree to which companies manage their governance

responsibilities; in other words, do they merely try to supersede the legal threshold, or

should they create governance guidelines that ascend to the level of best practice. For

example, the guidelines issued by associations of directors, corporate managers and

individual companies tend to be wholly voluntary. For example, The GM Board

Guidelines reflect the companys efforts to improve its own governance capacity. Such

documents, however, may have a wider multiplying effect prompting other companies

to adopt similar documents and standards of best practice.

Parties to Corporate Governance

The most influential parties involved in corporate governance include government

agencies and authorities, stock exchanges, management(including the board of directors

and its chair, the Chief Executive Officer or the equivalent, other executives and line
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management, shareholders and auditors). Other influential stakeholders may include

lenders, suppliers, employees, creditors, customers and the community at large.

The agency view of the corporation posits that the shareholder forgoes decision rights

(control) and entrusts the manager to act in the shareholders' best (joint) interests. Partly

as a result of this separation between the two investors and managers, corporate

governance mechanisms include a system of controls intended to help align managers'

incentives with those of shareholders. Agency concerns (risk) are necessarily lower for a

controlling shareholder.

A board of directors is expected to play a key role in corporate governance. The board

has the responsibility of endorsing the organization's strategy, developing directional

policy, appointing, supervising and remunerating senior executives, and ensuring

accountability of the organization to its investors and authorities.

All parties to corporate governance have an interest, whether direct or indirect, in the

financial performance of the corporation. Directors, workers and management receive

salaries, benefits and reputation, while investors expect to receive financial returns. For

lenders, it is specified interest payments, while returns to equity investors arise from

dividend distributions or capital gains on their stock. Customers are concerned with the

certainty of the provision of goods and services of an appropriate quality; suppliers are

concerned with compensation for their goods or services, and possible continued

trading relationships. These parties provide value to the corporation in the form of

financial, physical, human and other forms of capital. Many parties may also be

concerned with corporate social performance.

A key factor in a party's decision to participate in or engage with a corporation is their

confidence that the corporation will deliver the party's expected outcomes. When

categories of parties (stakeholders) do not have sufficient confidence that a corporation
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is being controlled and directed in a manner consistent with their desired outcomes,

they are less likely to engage with the corporation. When this becomes an endemic

system feature, the loss of confidence and participation in markets may affect many

other stakeholders, and increases the likelihood of political action.

General Principles of Corporate Governance

Rights and equitable treatment of shareholders: Organizations should respect therights of shareholders and help shareholders to exercise those rights. They can

help shareholders exercise their rights by effectively communicating information

that is understandable and accessible and encouraging shareholders to participate

in general meetings.

Interests of other stakeholders: Organizations should recognize that they havelegal and other obligations to all legitimate stakeholders.

Role and responsibilities of the board: The board needs a range of skills andunderstanding to be able to deal with various business issues and have the ability

to review and challenge management performance. It needs to be of sufficient size

and have an appropriate level of commitment to fulfill its responsibilities and

duties. There are issues about the appropriate mix of executive and non-executive

directors.

Integrity and ethical behavior: Ethical and responsible decision making is not onlyimportant for public relations, but it is also a necessary element in risk

management and avoiding lawsuits. Organizations should develop a code of

conduct for their directors and executives that promotes ethical and responsible

decision making. It is important to understand, though, that reliance by a

company on the integrity and ethics of individuals is bound to eventual failure.


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Because of this, many organizations establish Compliance and Ethics Programs to

minimize the risk that the firm steps outside of ethical and legal boundaries.

Disclosure and transparency: Organizations should clarify and make publiclyknown the roles and responsibilities of board and management to provide

shareholders 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.

IMPORTANCE OF CORPORATE GOVERNANCE

1. Value-adding philosophyCorporate governance should provide foundationsfor all corporate governance functions to add value to the company's sustainable

performance.

2. Ethical conductCorporate governance should promote ethical conduct for allparticipants throughout the company. This entails setting an appropriate tone at

the top and a firm commitment by corporate governance participants to adhere to

ethical behavior and conduct.

3. Accountability Corporate governance should foster accountability andresponsible decision making throughout the company. All participants should be

held account able for their decisions, actions, and performance. Accountability is

the cornerstone of corporate governance in continuously monitoring best

practices. Main drivers of accountability are the acceptance of responsibility,

ethical decision making, transparency, and candor, which result in the

establishment of trust and a mutually beneficial working relationship between
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scalable.

6. Transparency The companies' actions, governance, and financial andnonfinancial aspects of its business should be easily available and understandable

by all parties concerned.

7. Independence The concept of independence in corporate governance determines

the extent to which the corporate governance process and its related mechanism

minimize or avoid conflicts of interests and self-dealing actions of its key personnel.

Corporate governance in Saudi Arabia

The development of corporate governance in Saudi Arabia is of interest for a number of

reasons. Saudi Arabia present a unique blend of size, stage of development of the

economy and wealth, coupled with strictness of Islamic observance. Also, corporate

governance in Saudi context has received very little attention from researcher.

In this paper, four important element of corporate governance in Saudi Arabia will be

discussed, namely: shareholder right, board of directors, audit committees and

disclosure and transparency. Islamic law and Islamic jurisprudence are analyzed as a

basis for the regulation of corporate governance.

It is important to mention here that Saudi Arabia is in the foundation stage of

developing corporate governance and no code of best practices has been set up yet.

REASNS FOR CORPORATE GOVERNANCE IN SAUDI ARABIA

Empirical evidence (Fremond et all., 2002) suggests that good corporate governance

increases the efficiency of capital allocation within and across firms, reduces the cost of

capital for issuers, helps broaden access to capital, reduces vulnerability to crisis, fosters

savings provisions and renders corruption more difficult.

A careful study of corporate governance is important at the present time in Saudi

Arabia because the future will be even more competitive than it is now. In emerging

market economies the business environment lacks many element needed for a

competitive market and a culture enforcement and compliance. Saudi Arabia needs to


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take a long hard look at the way other countries systems work and keep their own

under review.

To remain competitive in changing world, Saudi Arabia corporation must innovate and

adopt the corporate governance practices so that they can meet new demands and new

opportunities. The Saudi government also has an important responsibility for shaping

an effective regulatory framework that provides for sufficient flexibility to allow the

Saudi market to function effectively and to respond to expectation of shareholders and

other stakeholders. The way this principle should be adopted is the responsibility of the

government and the market participants.

Principles of corporate governance in Saudi Arabia

Equitable treatment

of shareholders

Under Saudi company law, shareholders have the right to attend

annual general meetings and have one share, one vote. They have

the right to appoint the board of directors.

Shareholders rights in Saudi companies are to a certain extent,

theoretically protected and maintained, but in practice, we find

that shareholders do not view their rights as seriously as they

should

Responsibilities of

the board of

directors

Saudi company law specifies the duties and responsibilities of

Saudi company boards. The specified goal of boards is to protect

shareholder wealth and the interests of stakeholders. Boards are

now required to appoint audit committees from non-executive

directors. As with shareholders rights, some interviewees

indicated that there was a gap between what was prescribed by

Saudi company law and what was happening in practice.

Disclosure by Saudi

companies

This stipulated by OECD (2004), transparency is a comerstone of

good corporate governance. Before the 1990s, Saudi disclosure

requirements were low, with companies only required to provide


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a balance sheet, a profit and loss account

PRINCIPLES OF CORPORATE GOVERNANCE IN KOREA

KORA Basic feature/characteristics

Description

1. Appointment of directors Directors are appointed at a shareholders general

meting and should be at least three in number.

However, in case of a company of which the total

capital si less than W500,000,000, the number of the

directors may be one or two unless prescribed

otherwise in the articles of incorporation.

2. Duties and liabilities of

directors

The duties of directors related to business pursuant to

the commercial code are mainly classified into the

duties to be faithful and duties to keep secret. In cases

where a director has caused harm to the company,

shareholders representing one percent of total

outstanding shares may request the company to file a

suit against such director.

3. Notice of shareholders

meeting

Shareholders must be notified, in writing or by

electronic documents of any general meeting at least

two weeks prior to such meeting.

4. Proxy rights Shareholder may have proxies to exercise the voting

rights on their behalf. In this case, the proxy shall

submit a document providing power of representation


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at the general meeting.

5. Rights of foreign creditors

and shareholders

There are no separate regulations governing the status

of foreign shareholders. However, the commercial code

specifies the principle of shareholders equality

indicating that shareholders right are not

discriminated against according to nationality.

6. Insider trading Securities and exchange land prohibits officer,

employees, proxies, major shareholders or other

insiders from providing information to third parties in

case they learn undisclosed important information in

relation to the business.

7. Government regulatory

bodies

There are two main government regulatory bodies in

Korea: the ministry of finance and economy (MOFE)

and the financial supervisory commission (FSC). The

FSC has the securities and futures commission under

its control and the financial supervisory services (FSS0

as its executive body. Monetary policy is the

responsibility of the monetary board of the bank of

Korea. MOFE has eth authority to set the principles and

the basic directions of economic policy.

8. Korean accounting

standard

In the process of formulating Korean accounting

standards, the Korea Accounting Institute (KAI), once it

decides international Accounting Standard (IAS) inputs

are not sufficient for use in Korea, refers to accounting

standard generally accepted in the U.S.


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9. Ease of access to financial

statement

All companies are required to keep their audited

financial statements as well as the audit report and

make them available for their shareholders and

creditors. If any of them seek access to the financial

information during normal business hours.

Principles of Corporate Governance in United State of America (USA)

1. Objectives The objectives of shareholder value is directly on owner

interest compared to Germany who specialized in

corporate interest or whole organization objectives.

2. Board system The board of director of corporate governance in USA has

only one tier board such as capital market oriented.

3. Stakeholder

participation

There is always selected amount of stakeholder that run

participate in every aspect of corporate governance in USA

compared to Germany who has area of specification.

4. Share ownership The ownership of corporate government in USA. Provide

great avenue for small firms, large share management to

involved the Germany who has a specific group of bodies

or institutions.

5. Capital market The capital market has plentiful liquid fund. i.e they have

enough capital fund to financed corporate governance

U.S.A Thanger many corporate governance.

6. Bank system They specialized on varieties of books, compared to

Germany who are universal in financial institution.


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Principles of corporate governance in India

INDIA Basic feature

/characteristics

Description

Board of director (a) No need for German style two tired board

(b) For a listed company with turnover exceeding

(c) No single person should hold directorship in more

than 10 listed companies

(d) Non executive directors should be competent and

active clearly defines responsibilities like in the Audit

committee

(e) Attendance record of directors should be made

explicit at the time of re-appointment. Those with less

than 50% attendance should not be reappointed.

(f) Key into that must be prevented to the board as

listed in the code.

(g) Audit committee listed companies with turnover

over Rs.

Remuneration committee The remuneration committee should decide

remuneration committee should decide remuneration

package for executive directors. It should have at least 3

directors, all non executive can be chaired by at least 4

board meeting a year with maximum gap of 4 months

between any 2 meeting minimum information

available to boards stipulated.


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Disclosure and

transparency

(a) Companies should provide consolidatedaccounts for subsidiaries where they have

majority shareholding.

(b) Disclosure list pertaining to related partytransaction provided by committee till ICAIs

norms is established.

(c) Management should inform based of allpotential conflict of interest situations.

Creditors right a. It should rewrite loan covenants, eliminating nominee

directors excepts in cases of serious and systematic debt default

or provision of insufficient information.

b. Same disclosure of norms for foreign and domestic creditors.

Shareholders

right

a. A board of committee headed by a non-executive director look

into shareholders complaints and grievances

b. Half yearly financial results and significant event reports be

mailed to shareholders

Special discloses

IPO

a. Companies making initial public offering (IPO) should inform

the audit committee of category-wise uses of funds every quarter.

b. The audit committee should advise the board for action in this

matter


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Basic Principles of corporate governance system Japan

Shareholder

influence

Only beginning of broader shareholder participation and activities of

(nongovernmental) institutional shareholders. Although eroding,

'keiretsu' still have considerable influence through cross-holding.

Expect any change to be slow and gradual

Board Most still large size, more celebrity members than real decision

mating,

which in Japan is consensus-driven and more emergent than

formalized. First pioneers like Sony or Asahi have tried to install a

professional board, but Toyota still prefers the traditional way with

slow adaptation

Top management

Seniority principles are eroding, but still influential. However the more

companies are forced to act globally (and do not only export), the"

more pressure is on them to professionalize management along

'western' standards and processes. The (individual) accountability for

performance and supervision is key to this

Regulation Despite capital market reforms and privatization, the government's

influence is still stronger than even Latin-European countries

(sometimes more informal, but not less effective)

Employees No formal co-determination process, but still pressure for consensus


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Basic Principles of corporate governance systems: France

Shareholder

influence

Considerable, as many big companies have block holders with

multiple voting rights, influenced by the government (declining,

but still visible especially in pre-election limes), increasing

minority shareholder and transparency rights through the EU

influence; growing foreign shareholding, mainly by institutional

investors, leading to conflicts between block holders and

minority investors (relatively to, e.g., Benelux and Germany) as

general assemblies were previously mere formalities

Board Option to go for one-tier or two-tier board (60:40. the top tier

has mostly

opted for two-tier), dominant position of the 'president and

director general', who often chairs the board also in the two-tier

system, but increasingly boards are becoming more active, but

so far few have ousted a president/director general due to the

tight network among the French elite

Top

management

Dominated by graduates of the 'Grand licole*, with technical

and administrative background, often service in government,

more hierarchical organizations, lower degree of viable

compensation (also growing)

Regulation Detailed, based on traditional mistrust of market forces, most

driven by EU directives, only slowly emergence of 'soft

regulations' (e.g., codes)

Employees No relevant involvement of organized labor as also the unions

want to have clear division of responsibilities


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Principles of corporate governance in South Africa

Shareholders

influence

Mostly family or government controlled business with stock

market listing; control often based on different voting rights.

Minority rights a permanent issue, often hampered by lack of

legal enforcement. Similar: transparency regulations are not

always enforced. Effective capital markets and other 'capitalist'

institutions still in early development

Board Often dominated by insiders, e.g., family members and friends,

which makes management control less efficient. Reluctance for

transparency, strong relation-based decisions

Top management Often still part of 'friends and family', interested in risk

diversification through conglomerate building to buffer volatile

business development, little culture of (personal) accountability

in many countries

Employees Even if laws are 'perfect', lack of enforcement, e.g., due to

corruption and independent judiciary makes any law

implementation uncertain and decisions of authorities often

arbitrary Not at all-

Differences between U.S.A. and European model of corporate governance

Significant difference U.S.A. European countries

(i) Definition of corporate

governance

It focuses primarily on

aligning the interest of

It emphasizes the

protection of all


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management with those of

the shareholders

stakeholders interest,

including alignment of the

interest of controlling

shareholders.

(2) Disposed versus

concentrated ownership

Here the capital ownership is

dispersed because about 100

million Americans own shares

of public company through

direct ownership

Capital ownership is more

concentrated with majority

ownership and controlling

shareholders.

(3) Fiduciary duties The Anglo-Saxon in the U.S.A

and U.K. Establishes an

enforceable set of fiduciary

duties for directors to act as

agents in the best interest of

both controlling and minority

shareholders.

The fiduciary principles is

not well developed and this

the role based approach

often allows controlling

shareholders to extract

private benefits

(4) Different types of

fraud

The dispersed US structure is

more prone to short-term

earnings management and

overstating earning to stock

prices

Shareholders are not

susceptible to short-term

earnings management

fraud.


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REFERENCES

Aguilera, R. 2004, "Corporate governance and Employment Relations: Spain in theContext of Western Europe", in Gospel H. and Pendleton A. (ed.), Corporate Governanceand Labour Management. An International Comparison, Oxford University Press.

Solomon, J. 2007, Corporate Governance and Accountability, second edition, Wiley,England.

Van den Berghe, L. 2002, Corporate governance in a globalising world: convergence ordivergence?, Kluwer Academic Publishers, USA.

Rajesh Chakrabarti. 2005, Corporate Governance in India Evolution and ChallengesCollege of Management, Georgia Tech 800 West Peachtree Street, Atlanta GA30332,USA.

www.bookboon.com, Corporate Governance principles
http://www.bookboon.com/http://www.bookboon.com/http://www.bookboon.com/

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