Please enable JavaScript.
Coggle requires JavaScript to display documents.
SMMCG4 [CS-4]Stakeholders and Governance, ［SMMC-ETC ］G4, What's the…
SMMC
G4
[CS-4]Stakeholders and Governance
Mechanisms of Corporate Governance part 2
the importance of financial importance
from the running division
the board of directors
CEO
selecting, evaluating and compensating the CEO
overseeing CEO succession plans
providing guidance on executives and their compensation
monitoring and approving the strategic initiatives,
conducting a risk assessment and mitigating those risks.
ensure that the firm's audited financial statements
ensuring a firm's compliance with the laws and regulations
corporate governance
free market economies
China
state directed capitalism
less freedom
state owned enterprises
involved in the strategic plans of those companies in addition to the CEO of that company.
US
free market capitalism
more freedom
Germany
stakeholder capitalism
focuses on labor representation on the board of directorsmany
the interest of shareholders
the interest of labor
French
stakeholder capitalism
Public Firms and Their Role in Society Part1
Stakeholders and Corporate Governance
Introduction of topic
Stakeholders
Internal
Shareholders, bondholders, employees and board managers.
External
Customers, suppliers, the government and community
Success
How they manage the interests of these different shareholders and balance them against each other.
An age of shareholder primacy
The interest of stakeholders, the shareholders, has gotten elevated above all.
take money from equity investors
The shareholder-centric worldview has been driven by an intellectual movement in economics and finance.
Modern financial markets are a very powerful force
corporate social responsibility
Different states have different rules of the game
Shareholders
vote
the board of directors
responsibility
management
responsibility
1 more item...
There will be different opinions in different positions.
publicly-traded corporation
backbone of our economy
Public firms
transferability of investor interest,
legal personality
a separation of ownership and control.
Managers have control
If the managers act in the best interest of the shareholders?
limited liability for investors
Mechanisms of Corporate Governance part 1
Agency problems
Monitoring by broads of directors
in charge of evaluating the CEO and top management team of the company
a mechanism for reducing agency costs
Compensation heavily weighted toward stock options
get the stock price higher in artificial ways
Recruitment of executives from outside the firm
the performance of the manager
Monitoring by institutional investors
feedback from the environment
Takeovers
stock price
the market of corporate control
Debt
A company on the verge of bankruptcy
being efficient in exactly what you do
a high-tech company
key point : new technology
Separate chairperson and CEO
solve agency costs
Internal control of Multidivisional
care about those profitability metrics within their own division
Agency
lessen the problem of
the separation of
ownership
and
control
Institutions of capitalism
Corporate Social Responsibility part 2
Corporate Governance
is the relationships among the stakeholders that is used to determine and control the strategic direction and performance of the organization
Agency Cost
will the agent act in the interest of the principal
Principal is Stakeholder
the separation of ownership and control
If manager do not act in the interest of the principal
Agency cost goes up
How to reduce Agency cost?
reduce agency cost
Monitoring
Transfer agency cost into those
Penalty
Incentives
Agent is manager
Take McDonalds for example
Frachisor
McDonald's is the principal
Principal
How McDonald's get all agent act as benefit for whole McDonald's system ?
Because if the franchisee does not, it will not only hurt that particular restaurant, it may hurt the entire brand name of McDonald's if a customer has a bad experience
McDonald's will use a mix of incentives, monitoring, and enforcement within their franchise contract as a way to try and get better performance.
All of those costs that McDonald's incur and that franchisor-franchisee relationship are called agency costs
Franchisee
McDonald's store
Agent
Public Firms and Their Role in Society Part2
separation of ownership and control and agency problems
managers acting in their own self-interest
they're collecting lots of revenue and trying to move up their stock price
the global financial crisis and the real estate bubble burst
make deals with people that they really had no ability to pay back
example
Enron one
they deliberately manipulated the energy and deliberately had shortages
stakeholder management
stakeholder analysis
to ask who are the stakeholders?
employees
customers
suppliers
community
what are the stakeholders' interests and claims?
to think about what economic, legal, ethical, and philanthropic responsibilities do we have as the stakeholder?
what are all the opportunities and threats do all these stakeholders present
making sure that might affect the most important stakeholder you don't want exiting or your customers
Corporate Social Responsibility part 1
Manager's Responsibility
Economic responsibilities
Legal responsibilities
Sustaining competitive advantage
Bloom
Scheme of knowledge
First level
Level of description
Do you understand the material?
Second level
Level of combination
Can you put a synthesis and put it back together?
Ethical responsibilities
Are you doing the right thing for others beyond the corporation?
Third level
Level of application
Can you apply it to a new situation?
Does corporate social responsibility or CSR, help build competitive advantage?
Milton Friedman circa
The only social responsibility of business is to increase profits.
Depending on where you do business
less interested
United Arab Emirates, Japan,India
more interested
China, Brazil,Germany
CSR can also be considered in terms of a value creation framework, and that framework would consider the following.
companies try to reconcile the shareholder and stakeholder view.
firms that tend to do well, financially, they also do well by having some attention to corporate social responsibility.
Recent Developments
Ecosystem strategies
Examples: Malls, Toyota supplier-dealer network,Apple, Amazon, Facebook, Silicon Valley, Coursera
at the bleeding edge of modern stakeholder management
can be seen in the ongoing rapid growth of the use of the term ecosystem in business press coverage
should not be viewed simply as members of an industry
but as members of a business ecosystem comprising of various interacting organizations and individuals
Broadening the mission
they have sought to explicitly broaden their mission
include such things as corporate social responsibility and sustainability goals
Balanced scorecard
Financial / Customer / Operations/ Organization
In addition to financial metrics in order to provide a more holistic performance and health assessment of the company
Protection from shareholder
take the company private
led to huge growth in the private equity industry.
the availability of cheap funding
avoid shareholder scrutiny has led to a flood of Unicorns.
poison pill provisions
make it difficult and costly for shareholders to replace the company's management
the publicly traded version has fewer voting rights
voting rights are closely held by a core group that typically includes the founders of the company
Two central challenges
significant concern about too much emphasis on measurable short-term financial metrics that are primarily financial
an over-emphasis on shareholders and their interests
Dual class shares
The parable of WeWork
［SMMC-ETC ］G4
國企三 蔡彤欣
國企三 王郁茹
國企三 陳儀蓁
東南亞三 許映潔
東南亞三 黃玉龍
國企三 洪潔宜
國企三 朱揚絢
What's the benefits for a company have good corporate governance
if you have really good corporate governance. You're less likely to have accounting scandals like we had at Enron, less likely to have global financial crisis.