Managers are motivated primarily by achievement and responsibility needs

Managers are motivated primarily by achievement and

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Managers are motivated primarily by achievement and responsibility needs - Different perception human behaviour, different corporate governance approach Stakeholder theory: - Takes account of a wider group of constituents rather than focusing on shareholders - A stakeholder: any group or individual who can affect or is affected by the achievement of the organisation’s objectives - Short-term profits vs. long-term goals o What is optimal for shareholders often is not optimal for the rest of society o Stakeholders are indeed least protected o Stakeholders should participate in a firm’s decision making process Board of directors: Different theoretical perspectives - Agency theory: since managers are ‘opportunistic’, the key function of the board of directors is to serve as a monitoring mechanism, to keep self-serving managers n check and result in increased value for shareholders - Stewardship theory: managers will not engage in self-serving behaviour, but will rather act in the best interests of their stakeholders - Stakeholder theory: managers should make decisions that take account of the interests of all stakeholders in a firm, because a firm’s long-term value maximisation can only be realised if stakeholders’ interests are met. Worse decisions in numbers: - One issue with stakeholder theory may be that because of interests of stake holders aren’t the same as the public, and the voting takes place en masse; bad decisions could be made Board sub-committees: - A board may delegate various activities to sub committees - A number of sub-committees are receiving increased attention for their role in monitoring the management: o Audit committee o Remuneration committee o Nomination committee
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IBUS20001: BUSINESS IN ASIA Unitary board vs. dual board: - Two types of board structure: o A unitary or one-tier board (US, UK, AUS, SIN, ML, IN etc.) o Unitary board: is composed of both executive (inside) and non-executive (outside) directors o A dual or two-tier board (Germany, the Netherlands, Demark, Taiwan, Indonesia, and China) o Dual board: is split by a day-to-day operation management board – composed entirely of executives – and a monitoring supervisory board – composed mainly of non-executive board members. Characteristic of Asian companies (general): - Shares are not diffused – often held by several members of a family - Control is not diffused – often held by several members of a family - Companies further may have cross-shareholdings - Diverse businesses Why did ‘Asian characteristics’ form? 1. Two forms of regulation: government/institutional and individual owners o One lacking, the other becomes stronger 2. Less access to external funding 3. Originally less minority shareholders 4. Gaps in the market Benefits to Tight Ownership/Control 1. Less conflicts between outside shareholders and managers/employees o However, more problems between controlling owner and minority shareholders 2. Some studies show that large ownership and control are good for business (e.g.
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  • '19
  • Business, Asian Financial Crisis

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