Corporate governance theories

Corporate governance theories

Corporate governance theories
(a) Agency Theory
(b) Shareholder Theory
(c) Stake Holder Theory
(d) Stewardship Theory
Features of Corporate Governance1
• Started as economic or financial concept
• Involves lot of parties
• Involves organizational & social objective
• Guiding practices, process & principles
• Used to motivate management to perform better
• Universal approach (world wide acceptance)
• framework of rules, relationships, systems, and processes
• Implemented at all levels in an organization
• Tool for benchmarking & controlling performance
• Focuses on long term value addition (profitability, goodwill, brand recognition etc.)
Objectives of corporate governance
1. Transparency,
2. Accountability,
3. Stakeholder and analysts, delivering values,
4. Legal and financial disciplines,
5. CSR

Public disclosures concerning management of corporate body practices required are:
• The Board’s report, as discussed above, is required to be circulated to all shareholders at least 21 days prior to an AGM and includes details of:
• The number of board meetings held in the year;
• Compliance of the financial statements with applicable laws;
• Systems to ensure the company’s compliance with the provisions of all applicable laws;
• Particulars of loans, guarantees and investments made by the company;
• Qualifications and adverse remarks in the auditor’s report and the secretarial audit report;
• Explanation or comments of the Board on every qualification, reservation or adverse remark or disclaimers made in the auditor’s report.
• Contracts with related parties, details of the risk management policy of the company, and dividends recommended to be paid to the shareholders

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