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Theories, Definitions, Models, and Frameworks of Corporate Governance

Wikipedia
- is the set of processes, customs, policies, laws, and institutions
affecting the way a corporation (or company) is directed, administered or controlled

CorporateGovernanceDefinition.net
- is an internal system that encompasses polices, processes, people,
and which makes sure the needs of shareholders and other stakeholders are met in full. This will be accomplished by directing and controlling managing activities using good business practices, objectivity, accountability and, of course, integrity. Effective corporate governance relies on certain laws to be passed, as well as a certain commitment from the marketplace, and also a healthy board culture, as this will make sure policies and processes remain constant.

Agency Theory
What Does Agency Theory Mean?
A theory concerning the relationship between a principal (shareholder) and an agent of the principal (company's managers).

Investopedia explains Agency Theory


Agency theory is a very academic term. Essentially it involves the costs of resolving conflicts between the principals and agents and aligning interests of the two groups.

Stakeholder Theory
the theory an organization to shareholders without stakeholders such as wider community that it is possible for promote the interests of its harming the interests of its other its employees, suppliers and the

Shareholders are stakeholders in a corporation, but stakeholders are not always shareholders. A shareholder owns part of a company through stock ownership, while a stakeholder is interested in the performance of a company for reasons other than just stock appreciation.

http://www.investopedia.com/ask/answers/08/difference-between-a-shareholder-and-a-stakeholder.asp

Stewardship Theory
This theory is an alternative view of agency theory, in which managers are assumed to act in their own self interests at the expense of shareholders. In American politics, the Stewardship theory is where a president practices a governing style based on belief they have the duty to do whatever is necessary in national interest, unless prohibited by the United States Constitution.

http://dictionary.sensagent.com/stewardship+theory/en-en/

Ensuring the Basis for an Effective Corporate Governance Framework


- The corporate governance framework should promote transparent and efficient markets, be consistent with the rule of law and clearly articulate the division of responsibilities among different supervisory, regulatory and enforcement authorities.

The Rights of Shareholders and Key Ownership Functions


- The corporate governance framework should protect and facilitate the exercise of shareholders rights.

The Equitable Treatment of Shareholders


- The corporate governance framework should ensure the equitable treatment of all shareholders, including minority and foreign shareholders. All shareholders should have the opportunity to obtain effective redress for violation of their rights.

The Role of Stakeholders in Corporate Governance


- The corporate governance framework should recognize the rights of stakeholders established by law or through mutual agreements and encourage active co-operation between corporations and stakeholders in creating wealth, jobs, and the sustainability of financially sound enterprises.

Disclosure and Transparency


- The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation, including the financial situation, performance, ownership, and governance of the company.

The Responsibilities of the Board


- The corporate governance framework should ensure the strategic guidance of the company, the effective monitoring of management by the board, and the boards accountability to the company and the shareholders.

For Further Reading


Visit
http://www.inconsult.com.au/Articles/Improving%20Your%20Corporate%20Governance %20Framework.htm

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