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Shareholder Wealth vs Directors Responsibilities (Difference CORPORATE…
Shareholder Wealth vs Directors Responsibilities
Corporate governance is the system which companies are
directed and controlled
. (Cardbury Report, 1992).
...
ISLAMIC
which all stakeholder’s interest are protected, the company’s objective is achieved, social responsibility is upheld and the principles of Shari’ah are compiled with.
SHAREHOLDER WEALTH FROM ISLAMIC PERSPECTIVES
also influence by dividend policy
director responsible to protect shareholder's wealth
amount of capital contributed
Islam emphasizes the allocation of fund
Difference CORPORATE GOVERNANCE ISLAMIC vs CONVENTIOANAL
Key players & their relationship (governance structure)
The mechanism for corporate governance (means to attain the objectives)
The types of contracts involve
The tools (to monitor the performance) for effective corporate governance
The philosophical objective
DIRECTORS RESPONSIBILITIES FROM ISLAMIC PERSPECTIVE
ensure Islamic law is followed
fair, honest, just towards stakeholder&shareholder
ensure achieve objective when board meeting
responsible & accountable to Allah
CORE CONCEPT OF CG
accountability
transparency
responsibility
fairness
trust
Shareholder Wealth Maximization
islamic
shura (tawhic concept)
social responsible
utilitarian (greatest social benefit)
conventional
only for the benefit of all the shareholder as their interest appears
director
general role
monitoring objective progress
appoint senior mngenmnt
determine strategy & objective & policy
responsible to relevant parties
under MCCG
Uphold Integrity in Financial Reporting
Strengthen relationship with shareholders
only for the benefit of all the shareholder as their interest appears
stakeholder approach CG
stakeholder - group and individual who can affect or are affected by the organisation’s purpose
contribute, either voluntary or involuntarily to its wealth creating capacity and activities
ISSUES
shareholder activism
individual direct
shura decision
Board does not really disclose and transparent
audit report
riba, ghara, maysir
conflict if interest
social welfare
tawhidic
Stakehoder &Shareholder
SH
Maximize shareholder wealth
Principal-agent model
Control
ST
Pursue multiple objectives of parties with different interests
Team production model
Coordination, cooperation and conflict resolution
Mqasid Shariah
haiyyat
tahsiniyyat
daruriyyat
Life, religion, Intelectual, lineage, property
Goal of CG
islamic
maximize all welfare stakeholder
shura, khalifah,
western
maximize sharewholder wealth
dominated mngemnt by specific cntrol