CH AP TER 1 – I S S U ES I N COR POR ATE G OVER N AN CE
ADVANCED FINANCIAL MANAGEMENT
•
Investment decisions
•
Financing decisions
•
Dividend decisions
Financial objectives
Primary objective – maximise shareholder wealth
Secondary objectives – meeting ‘other’ predetermined targets
Stakeholders
•
Shareholders
•
Management and employees
•
Customers
•
Suppliers
•
Lenders
•
Government
w w w .s tu d yi n te ra cti ve .o rg
1
CH AP TER 1 – I S S U ES I N COR POR ATE G OVER N AN CE
Stakeholders
Measures
Suppliers
Price
Payment
Lenders
Security
Liquidity
Government
Taxable profit
Inflation
Employment
Investment
w w w .s tu d yi n te ra cti ve .o rg
2
CH AP TER 1 – I S S U ES I N COR POR ATE G OVER N AN CE
w w w .s tu d yi n te ra cti ve .o rg
3
CH AP TER 1 – I S S U ES I N COR POR ATE G OVER N AN CE
Corporate Governance
Are the board effective?
Are they making good decisions?
Can we obtain assurance that they are?
Are the board effective?
Combined Code
Board of Directors
Chair
w w w .s tu d yi n te ra cti ve .o rg
CEO
Execs
Non-execs
4
CH AP TER 1 – I S S U ES I N COR POR ATE G OVER N AN CE
Are they making good decisions?
Higgs Report
Cadbury Report
Greenbury Code
Key guidance
Smith
Turnbull
Can we obtain assurance that they are?
Disclosure
FSA Listing Rules
Combined Code
FSA Disclosure and
Transparency rules
w w w .s tu d yi n te ra cti ve .o rg
5
CH AP TER 1 – I S S U ES I N COR POR ATE G OVER N AN CE
More formalised
Independent audit
committee
Quarterly
reporting
USA
Sarbanes Oxley
Independent
directors
PCOAB
Critical accounting policies
Germany
EU company law
Two-tier board
of directors
Board of directors
Supervisory board
w w w .s tu d yi n te ra cti ve .o rg
Management board
6
CH AP TER 1 – I S S U ES I N COR POR ATE G OVER N AN CE
Japan
“Consensual management”
Policy boards
Functional boards
w w w .s tu d yi n te ra cti ve .o rg
Monocratic
boards
7
CH AP TER 1 – I S S U ES I N COR POR ATE G OVER N AN CE
SUSTAINABILITY AND ENVIRONMENTAL RISK
•
Sustainability – balancing growth with environmental and social concerns
“At BP, we are working hard to restore trust in our ability to operate safely and responsibly
wherever we do business.
Our approach to sustainability covers issues relating to governance and risk management, safety, the
environment, the energy future and our local and global socio-economic impact. We aim to report
on these issues in a way that answers key questions raised by our stakeholders.”
Carbon Trading
1. Governments hand out free tradable rights to emit carbon dioxide to big industrial polluters
2. Companies buy additional pollution credits from projects that claim to emit less greenhouse
gas than they would have without the investment
Environment Agency
1. Protects air, land and water used by society in England and Wales
2. Offers guidance to businesses on environmental issues
•
Environmental Permitting
•
Flood
•
Pollution and emissions
•
Waste
•
Water
Environmental Audits
•
Energy saving
•
Waste reduction
•
Business processes
w w w .s tu d yi n te ra cti ve .o rg
8