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Challenges in Implementing Corporate Governance
Whose Business is it Anyway?
John Zinkin
- English
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Challenges in Implementing Corporate Governance
Whose Business is it Anyway?
John Zinkin
Ăber dieses Buch
"John Zinkin's new book on Challenges in Implementing Corporate Governance is a welcome addition for board members and senior management on how to improve corporate governance in the post-crisis period. John correctly identifies that most boards on underperforming companies have three elements of failure: a lack of proper understanding of the business and its strategy; a total lack of appreciation of both the strategic and systemic risks created by new product markets; and a total failure by boards to ensure that the incentive structures for top management reflect long-term needs rather than short-term profits, thereby putting the company's future at risk. John has written a useful and practical handbook that is a must read for all board members on how to improve corporate governance."
âDatuk Seri Panglima Andrew Sheng, Chief Adviser, China Banking Regulatory Commission and the Boards of the Qatar Financial Centre Regulatory Authority, Sime Darby Berhad and Khazanah Nasional
"This timely book will interest those wanting to improve corporate governance and risk management. It should also appeal to anyone curious about what caused banks to fail in a number of markets in recent times, and the values which led to this failure. In considering principles which are essential to good governance, ACCA recognizes that corporate governance evolves and improves over time. We accept that organizations in different sectors and across the world operate in diverse environments in terms of culture, regulation, legislation and enforcement. What is appropriate, in terms of governance, for one type of organization will not be appropriate to all organizations. John Zinkin's book seeks to address this challenge, analyzing the essential cultural and behavioral issues which sit at the heart of the challenges."
âPaul Moxey, Head of Risk Management and Corporate Governance, Association of Chartered Certified Accountants
"A scholarly combination of practical guidelines and strategic vision."
âLady Sylvia Jay CBE, Vice-Chairman, L'Oreal UK;Independent Director, Alcatel-Lucent, Compagnie de Saint Gobain, Lazard Limited and Carrefour
"This is a highly topical and timely publication. Globally, the crisis that has gripped the financial services sector following the failure of well known global banks in recent years has focused attention on corporate governance. To restore confidence in the financial services sector is a long-term goal and effective corporate governance, together with the closely associated topic of risk management, has gripped not only governments and banks, but the public too. In this book, John Zinkin clearly asserts that financial institutions need to exert their responsibilities beyond their shareholders and far more into the wider group of stakeholders, including employees and wider society. In considering issues globally, John provides a book that is not only thought-provoking but pragmatic and useful at a time when stakeholders in our banks need to see real change in transparent, practical ways from those charged with governing our banks."
âRuth Martin, Managing Director, The Chartered Institute of Securities and Investment
HĂ€ufig gestellte Fragen
Information
- The first group believes that companies with good CG will perform better over timeâthat over the long term good CG will translate into higher stock prices, yielding higher upside potential. Studies in the US,4 Germany5 and, most recently, India6 tend to support this point of view.
- The second group sees good CG as a means of limiting or reducing the risks to which a company is exposed. They believe the existence of good CG will reduce the chances of bad things happening to the company and, if they do materialize, the company will recover faster because it has good CG in place to deal with the problems as they arise.
- The third group recognizes the importance of self-fulfilling prophecies. They regard CG as a fad, but go along with it because so many investors increasingly think it matters, and therefore they expect share prices to reflect this fact.7
- Bad investment decisions: The more firmly entrenched the managers are, the more protected they are from hostile takeover and the more likely they are to invest unwisely from a shareholderâs perspective.11
- Agency costs: One of the most important sets of agency costs arise as a result of acquisitions, where the acquiring firm is subjected to negative returns. So value-destroying capital expenditure for acquisitions may be one of the reasons for the poorer performance of âdictatorships,â particularly when some of the other agency problems are found to be caused by low managerial ownership, high free cash flow and diversifications.12 Indeed, the evidence suggests that during the 1990s the âdictatorshipâ firms did in fact indulge in inefficient acquisitions, not so much to create empires but, rather, in an apparent attempt to stave off imminent collapse.13 Presumably, shareholders in the âdemocraciesâ would not have agreed.
- Firms with higher governance ratings delivered higher market-to-book ratios, with an increase in the firmâs corporate governance index of three points (out of a total of 30) leading to an increase in the firmâs market capitalization of 2.8 percent. This translated into a 12.5 percent increase of market capitalization of the companyâs book asset value.
- Buying high corporate-governance rated (CGR) firms and shorting low CGR firms would have earned higher returns of around 12 percent per year during the period under review.
- Firm-specific CG affects asset pricing because it is treated as a risk premium for which investors require added returns to compensate for the risk they take. Firms with better CG and engaged investors can deliver lower ROE and still interest shareholders.15
- The better-governed firms command a higher market valuation and are less leveraged and have higher interest cover.
- They provide higher return on net worth and capital employed and their profit margins are more stable.
- Their P/E ratios and dividend yields were higher than those in firms whose CG scores are lower.
- It provides them with some protection they otherwise would not have, other than through expensive legal recourse.
- There is some evidence to suggest that good CG delivers better shareholder value over the long term within given markets.
- There is also evidence to suggest that markets with a better reputation for CG require a lower risk premium than those that have a less good image.
Inhaltsverzeichnis
- Cover
- Contents
- Title
- Copyright
- Foreword
- Acknowledgments
- Introduction
- Chapter 1: Do Western Codes of Corporate Governance Apply in Asia?
- Chapter 2: What is the Business of Business?
- Chapter 3: The Role of the Board
- Chapter 4: The Role of Board Members
- Chapter 5: Why Boards Fail and How to Avoid Failure
- Chapter 6: From Good Governance to Good Results
- Chapter 7: Managing Risk
- Chapter 8: What We Measure and Reward
- Chapter 9: Saving Capitalism from the Capitalists
- Appendices
- Index