MGCR 423 Lecture 1: Chap 1
18 Sep 2017
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Corporate Governance Structure, Mechanisms and Responsibilities
1. Public vs. Private company
Private opay’s ownership is share between few people (Circle du Soleil)
o CEO hae the possiilit to fous o the log ter sie the do’t hae to pulish a fiaial
reports.
o Private company that are going public want generally expand (maybe outside their country) =
public company have access to resource that help finance such expansion.
Puli opay’s oership is aessile to aoe MDoald’s, Faeook
o Obligation to publish financial reports.
o Additional pressure for CEO = transparency, public ➔ have to focus on the short term to ensure
satisfying financial reports.
o Access to much more capital than in private company
NB – “tok share prie derease aalsis = epressio of “H’s lak of faith ad ofidee i the org’s strateg.
2. Corporate Governance Triangle
Shareholders
• Different kind of shareholders ➔ public, pension fund, institutional investors, government.
• Invest + provide capital but manage the company
• Executives = manage and make decision within the company.
To make sure that there is no agency problem? Board of Director
Board of direction = the power of running the company is not concentrated in the hand of executive.
Represents SH î + Balance that power out = oversee executive decision.
Executive are obligated to report to the board.
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Corporate governance structure, mechanisms and responsibilities: public vs. Nb to(cid:272)k share pri(cid:272)e de(cid:272)rease a(cid:374)al(cid:455)sis = e(cid:454)pressio(cid:374) of h"s la(cid:272)k of faith a(cid:374)d (cid:272)o(cid:374)fide(cid:374)(cid:272)e i(cid:374) the org"s strateg(cid:455): corporate governance triangle. Shareholders: different kind of shareholders public, pension fund, institutional investors, government. Invest + provide capital but manage the company. Executives = manage and make decision within the company. Board of direction = the power of running the company is not concentrated in the hand of executive. Represents sh + balance that power out = oversee executive decision. Executive are obligated to report to the board: way to make corporate governance more effective. Split role: ceo and broad chairman are two different people. In north america prevailed combine role of ceo+ chairman in the same person = conflict of interest. Inside director = who have thorough knowledge about managing the company: outside director = who provide a more neutral perspective and help board to maintain its role of representing sh .
