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SMMCG8[CS-4] Stakeholders and Governance, G8 Group member - Coggle Diagram
SMMC
G8
[CS-4] Stakeholders and Governance
Public Firms and Their Role in Society
a important role in a company: shareholders
external
internal
shareholder primacy phenomenon
reason
take money from equity investors
the neo-liberal worldview
powerful modern financial markets
features of a public firms
separation of ownership and control
managers and stockholders
the transferability of investors' interest
legal person
limited liability for investors
the hierarchical nature of a publicly traded company
state/country charter
the rule of the game
different states/countries have different rule
shareholders
board of directors
management
employees
Examples
Enron
accounting
buy house
global financial crisis
the real estate bubble burst
managerial actions affect the economy
manipulated the energy and had shortages
stakeholder management is quite important and needed
stakeholder impact analysis
who are the stakeholders
what are the stakeholders' interests and claims
what opportunities and threats do all these stakeholders present
what economic, legal, ethical, and philanthropic responsibilities do we have as the stakeholder
what should we do to effectively address the stakeholder concerns
Mechanisms of Corporate Governance
minimizing agency costs
and solving agency problem
compensation and benefits
the more manager's shares are, the worth his time and effort are
monitoring by the board of directors
managers care about profitability
have very good performance
forth as a signal of their quality
may be recruited by other companies
have a nice record on resume
numbers may be manipulated
reduce the investment base of the company
look at lots of different metrics
make sure that it's actually good performance by the manager
the market for corporate control
if they don't keep the stock price at a certain level, there's the threat that they may be taken over
debt
if you're a company that's on the verge of bankruptcy, then you have you have no free cashflow to play with
separate the chairperson and the CEO or not
strategy depends
on the problem at hand
high-tech company
need a lot of free cash flow
for big investment
need rapid decisions
CEO and chairperson
is the same person
having a separate chairperson and CEO is going to slow you down
not going to be there for the new technology
pharmaceutical industry
needs amounts of money in R&D
having a large amount of debt isn't well
grocery business
high volume but low profit margin business
being efficient in what you do
not a lot of room for really high net present value or highs economic return projects
good to focus on minimizing agency costs
have a separation of CEO and chairperson
risk assessment
ensure the firm's financial
statements are correctly
ensuring a firm is compliance with the laws and regulations
Corporate Social Responsibility
corporate governance
the relationships among the stakeholders that is used to determine and control the strategic direction and performance of the organizations
related to the responsibilities and duties of the board of directors and the managers
agency costs
the sum of incentive costs, monitoring costs, enforcement costs, and individual financial losses incurred by principals
the agent is the one who does it
the principal is the one paying to have something done
Will the agent act in the interest of the principal?
If not, that's referred to as agency cost
How to reduce the agency costs?
incentive cost
provide the agent with more incentives
monitoring costs
the principal can monitor the agent's behavior more
enforcement costs
penalties for non-compliance
ex:McDonald's
help build competitive advantage
Surveys in various countries
General Electric case
The Pyramid of Corporate Social Responsibility
ethical responsibilities
legal responsibilities
philanthropic responsibilities
economic responsibilities
summary
intrinsically motivated to do or external influence
unimportant
do well in financial and corporate social responsibility
Bloom taxonomy
public corporations responsibility VS. social responsibility to increase profits
Recent Developments
challenges
an over-emphasis on shareholders and their interests
too much emphasis on measurable short-term financial metrics
solutions
pay attention to the long run impacts through sustainability goals
the company's actions
carbon-neutral in operations
balanced scorecard
broaden their mission
corporate social responsibility and sustainability goals
Ecosystem strategies
members of a business ecosystem comprising of various interacting organizations and individuals
cooperation and partnership with others are important
multiple players interact with each other on their platform to create value
Google
Coursera
capitalism
poison pill provisions
make it difficult and costly to replace the company's management
take the company private
seek protection from
Unicorns
shares
G8 Group member
外文四 楊芯樺 Katherine
國企四 鄭淳芬 Ruby
外文四 蕭 逸 Sophia
國企三 陳宜萱 Cindy
國企三 尹薔雰 Rose
中文四 鄭淳芳 Angel