apec code beijing 01

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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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    THE END