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SMMCG3 [CS-4]Stakeholders and Governance, Group 3, Agent-Manager, high, ↑,…
SMMC
G3
[CS-4]Stakeholders and Governance
Corporate Governance-
Mechanisms of direct and control the firms
One paying to have something done and the agent is the one who does it
Does Manager act in the best interest of the shareholder?
No - Agency costs
Yes - incentive cost
To ensure the pursuit of the strategic goals
agency theory
Views the firm as a nexus that is a bundle of legal contracts
Adverse selection problem
Moral hazard problem
The Pyramid of Corporate Social Responsibility(CSR)
philanthropic
corporate citizenship
less interest in CSR
more interest in CSR
China、Brazil、Germany、Italy 、Spain
United Arab Emirates、Japan、India
ethical
do what is right﹐just﹐and fair
economic
gain and sustain competitive advantage
legal
laws and regulations are societys codified ethics；
define minimum acceptable standard
taxonomy of knowledge by Bloom
description
understand the material and can you show that you have competence in the material
take that and put a synthesis and put it back together
application
take the knowledge that you had and apply it to a new situation
doing the right thing for others beyond the corporation
Value creation framefork
Whats your customer base?
How are you bring in non-consumers?
Recent Developments
problems
over-emphasis on shareholders and their interests
over emphasis on measurable short-term financial metrics
responses
1.explicitly broaden their mission
ex: corporate social responsibility and sustainability goals
focus on long run impacts through sustainability goals
ex: the company's actions
3.set the goal of being carbon-neutral in their operations
ex: performance measurement systems-
balanced scorecard
incorporates the interests of multiple stakeholders and consideration of the long run health and success of the company.
4.seek degree of protection
from not for shareholders
5.traditional way:poison pill provisions
make it difficult and costly for shareholders to replace the company's management
6.take the company private
huge growth in the private equity industry
Ecosystem strategies or Ecosystem thinking in business
1.view firm as members of
business ecosystem comprising
of various interacting organizations and individuals.
ex: suppliers and complementors, government entities and customers
cooperation
and
partnershipare
especially important for the long run success of companies.
interact with each other on their platform in order to
create value.
how to attract them
how to keep them committed
how to balance their different interests and goals
how to ensure that the ecosystem as a whole continues to provide value and outcompete others
The Public Stock Company:Hierarchy of Authority
Board of Directors
Responsible to all stakeholders of the company
That's the meaning of the legal personality and the fiduciary duty of the board of directors,
Management
Shareholders
who vote for the board of directors
The board of directors have the responsibility for the management and the management has responsibility for the employees.
Employees
State Charter
For example
The state of Delaware have the most well-defined property rights of all the States to the United States.
Many company have less ambiguity about the rules of the game when they incorporated in Delaware.
Step-by-step procedures of the idea of stakeholder analysis
Step 3: What opportunities and threats do our stakeholders present?
So a manager,you can think of just trying to balance,but in a positive sense of a politician of the polity of keeping the organization together.
Step 4 :What economic,legal,ethical,and philanthropic responsibilities do we have to our stakeholders?
Step 2 : What are our stakeholders' interests and claims?
Step 5 :What should we do to effectively address the stakeholder concern?
The stakeholders impact analysis is really looking at what impacts corporate corporate performance.
Step 1 :Who are our stakeholders?
Whoever can be affected or affect the corporation are typically included as stakeholders.
Stakeholders and Corporate Governance
corporate social responsibility
various mechanisms of governance
the public firm
stakeholders
external
customers and suppliers, the government and community
internal
shareholders and bondholders, employees and board managers
an age of shareholder primacy
focus on obligations of companies to shareholders
characteristics of a public firm
limited liability for investors
legal personality
separation of ownership and control
transferability of investor interest
Mechanisms of Corporate Governance
Agency problems
What are the"institutions of capitalism" that lessen the problem of the separation of ownership and control?
Takeovers
Recruitment
Monitoring by boards of directors
Compensation heavily weighted toward stock options
Monitoring by institutional inverstors
Debt
Separate Chairperson and CEO
Internal control of multidivisional
Centerpiece of corporate governance
inside and outside directors
General strategic oversight and guidance
Selecting, evaluating, and compensating the CEO
Overseeing CEO succession plan
Recently problematic at both HP and Apple
Providing guidance on executives and their coompensation
Reviewing, monitoring, and approving strategic initiatives
Conducting a risk assessment and mitigation
Ensuring a firm's audited financial statements
Ensuring a firm's compliance with laws and regulations
Group 3
Grace 李家齊
Ilona 李佳蓉
Evonne 廖怡瑄
Alice 余佳錚
Katharine 邵渝恬
Eunice吳旻諼
Agent-Manager
Principal- Shareholders
high
↑
low