apec code beijing 01
TRANSCRIPT
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Elements of Code of Corporate
Governance: East Asia Perspective
Prof. Stephen Y.L. Cheung
Department of Economics & FinanceCity University of Hong Kong
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Code of Corporate Governance (I)
Comments:
Boardissues
Separation of the positions of chairman and
CEO, especially for the relationship-based
family-controlled Asian companies
Background and qualification of the
independent directors
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Code of Corporate Governance (II)
Comments:
Boardissues
Election: participation of the institutional
investors and public shareholders in any form,
e.g. email/ letter
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Code of Corporate Governance (III)
Comments:
Board remuneration
Disclose remuneration of each director in the
annual report
Disclose details of options granted/ sold to
directors
Provide of executive remuneration policy
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Code of Corporate Governance (IV)
Comments:
Financial reporting, transparency and audit Set up audit committee
Strengthen risk management
Independence of internal auditor/ accountant Inform the authority once discovering the
misconduct of the board
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Code of Corporate Governance
(V)Comments:
Stakeholders Strengthen their protection
Adequate information disclosure
Credit rating system
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Duties and responsibilities of the
Board (I) Maximize investors wealth in the long run
Achieve the corporate goal Determine the strategy and policy for the
firm
Point out the potential risk factors
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Duties and responsibilities of the
Board (II) Comply with the rules and regulations,
together with the codes of best practice
Facilitate the effective communication
channel with its institutional investors,stockholders and stakeholders
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Duties and responsibilities of the
Board (III) Evaluate the performance and effectiveness
of the Board
Appoint the senior management
Delegate the power and authority properly,fairly and openly
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Importance of the board in corporate
governance in East Asia (I) Legal framework
Under-developed
Severe corruption
Corporate governance
Self regulation
Inculcate morals and ethics
Hold managements accountable
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Importance of the board in corporate
governance in East Asia (II)Separation of the positions of
chairman of board and chief executive officer
Monitor vs. the monitored
Dual roles are common in Asian countries
Problems:
Conflict of interests
Directors remuneration is not related to thefirms performance
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Importance of the board in corporate
governance in East Asia (III)
Independent directors
Monitor the performance of themanagements
Avoid over-investment in non-productive and
speculative activities
Avoid over-borrowing
Reduce corruption
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Importance of the board in corporate
governance in East Asia (IV)
Independent directors
Act in the best interest of the shareholders/represent the shareholders
Strengthen minority shareholder protection
More transparent operations
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