MGT209 Chapter 1
MGT209 Chapter 1
Underlying Principles of Corporate Governance Transparency means open and clear, timely and
accurate disclosure of relevant information,
financial or non-financial, to shareholders and other
stakeholders, as well as not concealing material In addition, the interests of the stakeholders create
information. Transparency reduces the information the ecosystem within which the company operates.
gap between directors and stakeholders. It ensures Hence, their role is to raise their voices to the
that stakeholders can have confidence in the company, and their voices should be heard.
decision-making and management processes of a
And while corporate governance is a flexible
company. It can come in the form of annual report
concept, it must always adhere to principles
or well-documented policies that reader can
consistent with the wide interests of stakeholders. In
understand.
this manner, each stakeholder’s action is guided by
common principles, which action balances
shareholders’ interests.
Guided by these principles, the SEC adopted the
Code of Corporate Governance for Public
Companies and Registered Issuers (the Code) to
Finally, it is the view of the author that corporate
promote the developments of a strong corporate
governance should address the issues arising from
governance culture and keep abreast with recent
separation of ownership and control, balancing
developments in corporate governance best
stakeholders’ interest, and the adoption itself of
practices. The Code is consistent with the
corporate governance principles.
G20/OECD Principles of Corporate Governance
and other internationally recognized corporate
governance principles.
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The G20/OECD Principles of Corporate
Governance laid down the six building blocks for a
sound corporate governance framework.
1. Ensuring the basis for an effective corporate
governance framework
2. The rights and equitable treatment of
shareholders and key ownership functions
3. Institutional investors, stock markets, and
other intermediaries
4. The role of stakeholders
5. Disclosure and transparency
6. The responsibilities of the board
The author submits the principle of shared
responsibility and accountability among
shareholders, board directors, and other
stakeholders. Corporate governance is primarily
about how the board steers the company. However,
the shareholders have the power to elect
directors and remove them when directors
contravene their duties or act contrary to the
principles, values, and ethics of the company.
The shareholders must exert effort and be held
accountable in the long-term value creation for all
shareholders. The shareholders’ role cannot be
undermined.