Corporate Governance: Dr. Ir. H. Harry Sutanto, MBA

CORPORATE GOVERNANCE
Ensure the Corporate be Governed in the Best Interest for Stakeholders
Dr. Ir. H. Harry Sutanto, MBA

Binus Undergraduate Corporate Governance-Global Class 1
Creating Solution through Education with Creativity and Technology
Learning Topics, Outcomes and Strategies
Learning Topics
Prolog 14. Governing Private Companies and Other

1. Corporate Governance: All Corporate Corporate Entities
Entities Need Governing 15. CSR and Sustainability-1
2. Corporate Governance Defined 16. CSR and Sustainability-2
3. Theories and Philosophies of CG-1 17. Director’s Appointment, Roles and
Remuneration-1
4. Theories and Philosophies of CG-2
18. Director’s Appointment, Roles and
5. The Governance of Partnership-1 Remuneration-2
6. The Governance of Partnership-2 19. The Reality of the Boardroom-1
7. The Regulatory Framework-1 20. The Reality of the Boardroom-2
8. The Regulatory Framework-2 21. Board Effectiveness-1
9. Models of Corporate Governance-1 22. Board Effectiveness-2
10. Models of Corporate Governance-2 23. Corporate Governance Around the World-1
11. The Role of the Board 24. Corporate Governance Around the World-2
12. Risk and the Board 25. Board Evaluation
13. Governing Listed Companies 26. Corporate Governance in Practice
SESSION 23-24:
CORPORATE GOVERNANCE AROUND THE WORLD
COMPARING AND EVALUATING
Binus Undergraduate GSLC-4: FRIDAY,

CorporateJUNE 14, 2019
Governance-Global Class 3
SESSION 23-24:
Learning Outcomes
GSLC-4 Assignment
Corporate Governance in China
Corporate Governance in India
Corporate Governance in Russia
Corporate Governance in Brazil
Corporate Governance in South Korea
Corporate Governance in Japan
Changes in European Governance
Corporate Governance in United Kingdom
Corporate Governance in Germany
Corporate Governance in France
References
LEARNING OUTCOMES

Learning Outcomes
Goals to be Achieved
After studying this chapter, the students should be able to :

• Corporate Governance in China
• Corporate Governance in India
• Corporate Governance in Russia
• Corporate Governance in Brazil
• Corporate Governance in Hong Kong and Singapore
• Corporate Governance in South Korea
• Corporate Governance in Japan

SESSION 23-24:
Learning Outcomes
GSLC-4 Assignment
References
GSLC-4 ASSIGNMENT

GSLC-4 Assignment
Corporate Governance Around the World
• Jelaskan pendapat dan analisis Saudara, bagaimanakah

persamaan dan perbedaan dalam implementasi prinsip
corporate governance di seluruh dunia?
• Based on your opinion and analysis, what are the
similarities and differences in the implementation of the
principles of corporate governance throughout the world?
• Note:
– Answered in Indonesian or English comprehensively
– Collected before the lecture on June 21, 2019

SESSION 23-24:
Learning Outcomes
GSLC-4 Assignment
References
CORPORATE GOVERNANCE IN CHINA

Practising

Scheme
State Regulators Stock Exchange listing rules
The listed company Independent Outside auditor

SESSION 23-24:
Learning Outcomes
GSLC-4 Assignment
References
CORPORATE GOVERNANCE IN INDIA

Practising

Implementation
• Took a socialist road with large SOES and

the public sector dominating the
economy
• Bureaucracy grew and inefficiency,
corruption, and nepotism flourished
• First CG published in 1998
SESSION 23-24:
Learning Outcomes
GSLC-4 Assignment
References
CORPORATE GOVERNANCE IN RUSSIA

Practising

Implementation
• In 19902 the state attempted to transfer ownership to the people through three
forms of voucher privatization;
– The free distribution of vouchers to all Russian citizens
– Investment tenders
– Loan for share auctions
• Current CG situation in Russia summarized by KPMG;
– High degree concentration of ownership
– The leading role of majority shareholders frequently by the state in company
management
– Low level of protection of shareholder rights
– The nominal nature of the board
– Lack of bodies responsible for internal control and audit of that are
independent from executive management
Actual Condition
• Large industrial groups, some controlled by the

“oligarchs”
• Some very big corporations are under strong state
influence (e.g.Gazprom)
• Stock market not very transparent
• Many business relationships based on personal
connections, sometimes crime

Assessment
• Advantages:
– If any at all, the avoidance of disorder
• Disadvantages:
– Lack of transparency
– Corruption
– Misallocation of resources
– Excessive arbitrary state intervention

SESSION 23-24:
Learning Outcomes
GSLC-4 Assignment
References
CORPORATE GOVERNANCE IN BRAZIL

Petrobrass Scandal

Implementation
• Economic boomed until around 2012, then it faltered

disastrously. Rising cost, lack of improvement in
business efficiency and failure to re-invest the profits
of the boom years were cited
• The Brazilian code encourages the creation of a
family council in family-dominated companies
• The constitutions also provide for an advisory board

SESSION 23-24:
Learning Outcomes
GSLC-4 Assignment
References
CORPORATE GOVERNANCE IN SOUTH KOREA

Anti Trust Watchdog

The Chaebol
• Chaebol developed during WW II, when

government advance loans on attractive terms
to family-based firms to stimulate economic
revival
• Family domination was maintain
predominantly through insider boards and
cross-ownership with subsidiary companies
SESSION 23-24:
Learning Outcomes
GSLC-4 Assignment
References
CORPORATE GOVERNANCE IN JAPAN

Shaky Business

Implementation
• Corporate governance in Japan had not

evolved from the hierarchical, insider
culture of the networked keiretsu groups
• Japanese companies coming under more
outside governance scrutiny

SESSION 23-24:
Learning Outcomes
GSLC-4 Assignment
References
CHANGES IN EUROPEAN GOVERNANCE

Succeeding in European Governance

Implementation
• Most corporate governance systems are

tending to converge
• Stock markets are becoming more important,
BUT
• Some shareholders becoming more activist,
such as pension funds like Hermes, some unit
trust companies
SESSION 23-24:
Learning Outcomes
GSLC-4 Assignment
References
CORPORATE GOVERNANCE IN UNITED KINGDOM

The UK Corporate Governance Code

Actual Condition
• Most shares are held by pension funds, investment

funds, and private individuals
• Banks usually do not own shares
• Almost all big companies are “listed”
• Stock market performance of shares important
measure of corporate success
• “Hostile” takeovers fairly common

Assessment
• Advantages:
– Fairly open and transparent
– Quick rewards for success and punishment for
failure
– Responsiveness to business environment
• Disadvantages:
– May encourage “short-termism”
– Mergers and takeovers do not always work
SESSION 23-24:
Learning Outcomes
GSLC-4 Assignment
References
CORPORATE GOVERNANCE IN GERMANY

German Model

Implementation
• Banks have very large shareholdings in major

corporations
• Long-term (costly?) relationships
• Other shareholders are proportionately less
important
• Hostile takeovers virtually unknown (exception:
Vodafone/Mannesman)

Assessment
• Advantages:
– Long-term business relationships
– Stability of employment and production
– Social cohesion?
• Disadvantages:
– Lack of transparency and openness
– Sometimes tolerant of poor performance
– May be unresponsive to global change

SESSION 23-24:
Learning Outcomes
GSLC-4 Assignment
References
CORPORATE GOVERNANCE IN FRANCE

Practising

Practising
• Shareholding structures more like Germany

than UK
• Close state-business links, and intervention by
the state
• Stock market has become much more
important over last 20 years - state uses it as a
discipline measure
Assessment
• Advantages:
– Successful use of state/business partnerships
– Coordinated approach to industrial strategy
– Effective use long-term planning
• Disadvantages:
– Conflicts of interest between business/state
– Sometimes lack of transparency
– Some tolerance of underperformance
SESSION 23-24:
Learning Outcomes
GSLC-4 Assignment
References
REFERENCES

References
Path for Further Study
• Tricker, Bob (2015); Corporate Governance:

Principles, Policies, and Practice; Oxford University
Press
• Other Sources

END OF SESSION 23-24
Creating Solution through Education with Creativity and Technology

harry.sutanto@binus.ac.id

Corporate Governance: Dr. Ir. H. Harry Sutanto, MBA

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CORPORATE GOVERNANCE

Ensure the Corporate be Governed in the Best Interest for Stakeholders

Dr. Ir. H. Harry Sutanto, MBA

Prolog 14. Governing Private Companies and Other

Binus Undergraduate GSLC-4: FRIDAY,

Binus Undergraduate GSLC-4: FRIDAY,

After studying this chapter, the students should be able to :

Binus Undergraduate Corporate Governance-Global Class 6

Binus Undergraduate GSLC-4: FRIDAY,

• Jelaskan pendapat dan analisis Saudara, bagaimanakah

Binus Undergraduate Corporate Governance-Global Class 9

Binus Undergraduate GSLC-4: FRIDAY,

Binus Undergraduate Corporate Governance-Global Class 12

State Regulators Stock Exchange listing rules

The listed company Independent Outside auditor

Binus Undergraduate Corporate Governance-Global Class 13

Binus Undergraduate GSLC-4: FRIDAY,

Binus Undergraduate Corporate Governance-Global Class 16

• Took a socialist road with large SOES and

Binus Undergraduate GSLC-4: FRIDAY,

Binus Undergraduate Corporate Governance-Global Class 20

• Large industrial groups, some controlled by the

Binus Undergraduate Corporate Governance-Global Class 22

Binus Undergraduate Corporate Governance-Global Class 23

Binus Undergraduate GSLC-4: FRIDAY,

Binus Undergraduate Corporate Governance-Global Class 26

• Economic boomed until around 2012, then it faltered

Binus Undergraduate Corporate Governance-Global Class 27

Binus Undergraduate GSLC-4: FRIDAY,

Binus Undergraduate Corporate Governance-Global Class 30

• Chaebol developed during WW II, when

Binus Undergraduate GSLC-4: FRIDAY,

Binus Undergraduate Corporate Governance-Global Class 34

• Corporate governance in Japan had not

Binus Undergraduate Corporate Governance-Global Class 35

Binus Undergraduate GSLC-4: FRIDAY,

Binus Undergraduate Corporate Governance-Global Class 38

• Most corporate governance systems are

Binus Undergraduate GSLC-4: FRIDAY,

Binus Undergraduate Corporate Governance-Global Class 42

• Most shares are held by pension funds, investment

Binus Undergraduate Corporate Governance-Global Class 43

Binus Undergraduate GSLC-4: FRIDAY,

Binus Undergraduate Corporate Governance-Global Class 47

• Banks have very large shareholdings in major

Binus Undergraduate Corporate Governance-Global Class 48

Binus Undergraduate Corporate Governance-Global Class 49

Binus Undergraduate GSLC-4: FRIDAY,

Binus Undergraduate Corporate Governance-Global Class 52

• Shareholding structures more like Germany

Binus Undergraduate GSLC-4: FRIDAY,

• Tricker, Bob (2015); Corporate Governance:

Binus Undergraduate Corporate Governance-Global Class 57

Creating Solution through Education with Creativity and Technology

Binus Undergraduate Corporate Governance-Global Class 58

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