Chapter 7 Corporate governance and social responsibility

Contents

1.   Corporate governance (?)

2.   The board of directors (BOD) (?)

3.   Corporate social responsibility (CSR)

u Tested in section  A&B,，0-7 marks

1. Corporate governance (?)

1.1 Definition

1.2 Perspectives on governance (?)

1.3 Principles vs rules (?)

1.4 Governance principles

1.5 The driving forces of governance development

1.6 Features of poor corporate governance

1.1 Definition

What is corporate governance?

Corporate governance is the system by which organisation is directed and controlled.

1.2 Perspectives on governance (?)

①   Stewardship theory 管家理論

②   Agency theory 代理理論

③   Stakeholder theory

①      Stewardship theory 管家理論

The management of an organisation is the stewards of its assets 資產(chǎn)管家, charged with their employment and deployment in ways consistent with the overall strategy of the organisation. (股東和管理層利益一致，沒(méi)有沖突)

Technically, shareholders or members/owners have the right to dismiss their stewards if they are dissatisfied by their stewardship.

②   Agency theory 代理理論

? Organisation owners (shareholders): ‘principal’ 委托人

? Company directors (BOD): ‘a(chǎn)gents’ 代理人

It is recognised that management are likely to pursue their own interests

It is important therefore that management interests (including their remuneration) are aligned with the organization’s goals. (把管理層利益與公司利益連結(jié)起來(lái))

Only when these goals are aligned and consistent will managers act in a way that benefits shareholders and other stakeholders

③   Stakeholder theory

Management has a duty of care, not just to the owners of the company in terms of maximizing shareholder value, but also to the wider community of interest, or stakeholders.