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6.1 - Coggle Diagram
6.1
Professor Tim Devinney Lecture
Origin of Governance
Anglo-Saxon
Structure
CSR & Ethics in Governance
Gender diversity
Energy utilization
Why do we have governing systems
Fundamentally they rose as a monitoring systems to make sure the assets are being managed properly.
Governance models are monitoring mechanisms for investors to make sure their money is invested in safely manner
Ownership
State Ownership
Public Ownership
Principal-Agent Theory
(Model)
Agency relationship
arises when ownership part of an organisation delegates control over it to another party
Principal
is the person delegating authority (e.g. shareholders)
Provide capital and delegate control
Agent
is the person whom authority is delegated (e.g. executives)
To act in the shareholder's best act. maximize company's growth and profit
Issues in principal-agent relationship
Information asymmetry
between the principal and the agent who knows more about the business
Monitoring limits
,principals have a plethora of investments making difficult to monitor all of them equally
Misaligned incentives
for agents
Corporate Governance & Stakeholders
Effective governance is important to make good strategic decisions
Who are stakeholders?
Johnson et al. (2017, p.134) defines stakeholders as: “Individuals or groups that depend on an organisation to fulfil their own goals and on whom, in turn, the organisation depends.”
External
Economic Stakeholders
Social/Political Stakeholders
Technological Stakeholders
Community Stakeholders
Internal
Shareholders
Workers
Suppliers
Sub-contractors
Consultants
External Stakeholders may seek to influence the organisation's strategy through links with internal stakeholders to align with their agendas
The input from key stakeholders will feed into the organisation, the governance model will regulate and control
What is Corporate governance?
Characteristics of corporate governance
the way organisations are directed and controlled
governance issues are about “power and accountability. They involve where power lies within the corporate system and what degree of accountability there is for its exercise” (Cadbury, 2002, p.3)
The Governance Chain