GOOD CORPORATE

GOVERNANCE

KEMALA PUJI, S.E.I.,M.E

FAKULTAS EKONOMI DAN BISNIS

UNIVERSITAS TEKNOKRAT INDONESIA
 LEARNING OBJECTIVES
To explore the purpose and structure of corporative
governance as it is practiced globally
To examine the failures in corporate governance
in recent years and how authorities are responding
to these changes
To understand how accounting practices differ across
countries and how these differences may alter the
competitiveness of firms in international markets
To isolate which accounting practices are likely to
constitute much of the competitiveness debate in the
coming decade
To examine the primary differences in international
taxation across-countries and in turn how governments
deal with both domestic and foreign firms operating in
their markets
To understand problems faced by many U.S.-based 2
multinational firms in paying taxes both in foreign
 INTRODUCTION
The structure and conduct of corporate governance and the
methods used in the measurement of company operations,
accounting, principles, and practice vary dramatically across
countries
Taxation and accounting are fundamentally related

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 CORPORATE GOVERNANCE
The relationship among stakeholders used to determine and
control strategic direction and performance of an organization
is termed corporate governance
 The way in which order and process is established to ensure that
decisions are made and interests are represented properly for all
stakeholders

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 THE GOAL OF CORPORATE GOVERNANCE

The single The most widely accepted

overriding statement of good
corporate governance
objective of
practices are those
corporate established by OBECD
governance is  The rights of shareholders
the  The equity treatment of
shareholders
optimization
 The role of stakeholders in
over time of the corporate governance
return to  Disclosure and transparency
shareholders  The responsibilities of the board
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 THE STRUCTURE OF CORPORATE
GOVERNANCE

The internal forces, the officers of the

corporation and the Board of directors, are
those directly responsible for determining
the strategic direction and the execution of
the company’s future

The external forces include:

 The equity markets
 The analysts
 The creditors and credit agencies who lend them
money
 The auditors 6
 The multitude of regulators
 AUDITORS AND REGULATORS

Auditors are Regulatory oversight

responsible for of publicly traded
providing an firms in the U.S. is
external provided by
professional governmental and
opinion as to the nongovernmental
fairness and agencies
accuracy of  Securities and Exchange
corporate financial Commission (SEC)
statements  Applicable stock
exchange
These individuals
follow the
generally accepted 7
 COMPARATIVE CORPORATE GOVERNANCE

Corporate governance
practices differ across
countries, economies,
and cultures and may
be classified by regime
 Market-based
 Family-based
 Bank-based
 Government-based

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 COMPARATIVE CORPORATE GOVERNANCE
(CONT.)
Corporate governance
regimes are a function of
three major factors in the
evolution of global
corporate governance
principles and practices
 Financial market development
 Degree of separation between
management and ownership
 Concept of disclosure and
transparency

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 THE CASE OF ENRON

Many of the issues related to corporate

governance and its failures are best
described by the Enron case
Enron Corporation declared
bankruptcy in November 2001 as a
result of a complex combination of
business and governance failures

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 CORPORATE GOVERNANCE REFORM

The debate regarding what needs to

be done about corporate
governance reform depends on
which systems and regimes are
deemed superior
To date, reform in the United States
has been largely regulatory
 Sarbanes-Oxley Act
 Board structure and compensation
 Transparency, accounting, and auditing
 Minority shareholder rights 11