Corporate governance principles
and entrepreneurship firms
V.Darškuvienė
Vytautas Magnus University
Kaunas
Conceptual issues
• Academic and policy debates
 On principal-agent relationship
 On information asymmetry
 Greater effectiveness of the system, lowering transaction
costs if agency relationships are regulated
▫ Corporate governance as a goal itself
▫ vs
▫ Corporate governance as a tool to improve firm
performance, concentrate on growth, innovation,
sustainability, survival
Good corporate governance
•
•
•
•
Max SHV
Constructing the framework
Clear & credible principles
Aligning shareholder interests
 Based on
▫ Independent boards – goal & strategic direction
setting
▫ Transparent financial reporting - accountability
Corporate governance development
Codes
For listed
companies
Principles
For unlisted
companies
Applicability of CG principles
• Listed vs unlisted companies?
• Large vs SMEs companies?
 Are there connections between corporate
governance and entrepreneurship?
 What might be the implications of adoption of
corporate governance principles to
entrepreneurship firms?
Conceptual issues
• Conditions for value creation
 Entrepreneurship culture
 Developing organizational framework
 Incentives for different stakeholders (incl.
employees)
 Protection of innovative initiatives
The necessity of good corporate
governance for SMEs
• Need to access to financial resources for growth
• Need for effective strategies and their
implementation
• Introduction of professional management
• Proper remuneration and retaining key
employees
Key objectives of CG codes /
principles
“Equal”
understandi
ng of
transparent
management
Improving
information
disclosure
Increasing
management
quality
Enhancing
confidence
of
international
investors
Development towards - Principles for
unlisted companies, phase 1
Governance framework
Board effectiveness, size, composition
Remuneration policy
Risk oversight and internal control
Dialogue between board and investors
Skills of board members
Family governance mechanisms
Are major concerns addressed?
• Long-term vs short term interests of
stakeholders?
• Transferability of shares / succession planning?
• Conflict resolution procedures?
• Transparency?
• Encouraging creativity and innovation?
Corporate governance regulation
impact
Incentives
Entrepreneurship firms
Restrictions