Corporate Governance : A brief and simple overview

1. Corporate Governance: A brief and simple overview By Wiparat Chuanrommanee, Ph.D. Financed and Banking Department Assumption University Aug. 17, 2009

2. Corporate Governance Topics: 1. Corporate Governance and Its Importance 2. International Corporate Governance Practices 3. Corporate Governance in Your Daily Life 3.1 Students 3.2 Workers Wiparat Chuanrommanee, Ph.D.

3. Corporate Governance • The set of processes, customs, policies, laws, and institutions affecting the way a corporation is directed, administered or controlled. • Corporate governance includes the relationships among many “stakeholders” involved and the goals for which the corporation is governed. Wiparat Chuanrommanee, Ph.D.

4. The Main Relationship • Initial phase of business operation Owner (a manager) Wiparat Chuanrommanee, Ph.D.

5. The Main Relationship • Later development Shareholders Managers Wiparat Chuanrommanee, Ph.D.

6. The Main Relationship • Later development Board of directors Shareholders Managers Wiparat Chuanrommanee, Ph.D.

7. The Main Relationship • Later development Shareholders Managers “Principal-agent Problem” Shareholders Board of directors Managers Wiparat Chuanrommanee, Ph.D.

8. Its Importance • Governance shortcomings as a significant explanatory factor in the financial scandals and corporate collapses • 1997: Asian financial crisis • 2002-2006:The high-profile collapses of a number of large U.S. firms such as Enron, MCI Inc. (WORLDCOM), Xerox and Parmalat • 2008-2009: Hamburger Crisis Wiparat Chuanrommanee, Ph.D.

9. Its Importance • A sound corporate governance system can help create an environment conducive to the efficient and sustainable growth of the corporate sector, leading to sustainable economic growth. • Corporate governance and firm performance • Corporate governance and investment decision etc. Wiparat Chuanrommanee, Ph.D.

10. Its Importance Summary: • Efficiency and effectiveness • Competitiveness • Stakeholders confidence • Increased shareholder values Wiparat Chuanrommanee, Ph.D.

11. International corporategovernance practices 1. Rights and equitable treatment of shareholders - Respect the rights of shareholders - Help shareholders to exercise their rights Ex. Shareholder general meetings Wiparat Chuanrommanee, Ph.D.

12. International corporategovernance practices 2. Interests of other stakeholders - Legal and other obligations to all legitimate stakeholders Wiparat Chuanrommanee, Ph.D.

13. International corporate governance practices 3. Role and responsibilities of the board - A range of skills and understanding - Ability to review & challenge management - Sufficient size - Sufficient level of commitment - Appropriate mix of executive and non-executive directors Wiparat Chuanrommanee, Ph.D.

14. International corporate governance practices 4. Integrity and ethical behaviour • - Ethical and responsible decision making • - Compliance and Ethics Programs Wiparat Chuanrommanee, Ph.D.

15. International corporate governance practices 5. Disclosure and transparency • - Integrity of the company's financial report • - Timely and balanced disclosure of material matters Wiparat Chuanrommanee, Ph.D.

16. Corporate governance in your daily life University? • To provide holistic education and training so as to equip students with all-round personal development as well as professional knowledge and skills • To undertake research, emphasizing those of an applied nature which are relevant to industrial, commercial and community needs. Wiparat Chuanrommanee, Ph.D.

17. Corporate governance in your daily life University Governance • Academic freedom and autonomy • Performance, ethics and professionalism • Transparency and public accountability • Social responsibility Wiparat Chuanrommanee, Ph.D.

18. Corporate governance in your daily life Students --- Key stakeholders? “How to demonstrate your good university citizenship?” • Follow rule and regulation of the university and act under the right and responsibility of students • Participate in the university activities • Search for the opportunity to build up new knowledge and gain more experiences in your field of study Wiparat Chuanrommanee, Ph.D.

19. Corporate governance in your daily life Workplace? “Responsible Corporate Citizen” Human Rights, Labor, Environment, Anti-Corruption (UN Global Compact, 1999) Wiparat Chuanrommanee, Ph.D.

20. Bibliography • Brickley, James A., William S. Klug and Jerold L. Zimmerman, Managerial Economics & Organizational Architecture, ISBN • Cadbury, Sir Adrian, "The Code of Best Practice", Report of the Committee on the Financial Aspects of Corporate Governance, Gee and Co Ltd, 1992. • Cadbury, Sir Adrian, "Corporate Governance: Brussels", Instituut voor Bestuurders, Brussels, 1996. • Claessens, Stijn, Djankov, Simeon & Lang, Larry H.P. (2000) The Separation of Ownership and Control in East Asian Corporations, Journal of Financial Economics, 58: 81-112 Wiparat Chuanrommanee, Ph.D.

21. Bibliography • Shleifer, A. and R.W. Vishny (1997), A Survey of Corporate Governance. Journal of Finance, 52 (2): 737-783. • University Governance Statement, The Hong Kong Polytechnic University • Zhuang, J (1999), Corporate Governance in East Asia and Some Policy Implications, EDBRC (Economic and Development Resource Center) Briefing Notes #14, Asian Development Bank. Wiparat Chuanrommanee, Ph.D.