Professional Documents
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Main Project
Main Project
SEVENTH SMESTER
CORPORATE GOVERNNCE
SUBMISSION DATE
01-02-2021
2
Reference
Introduction 3
Corporate Governance 3
Corporate Governance in Pakistan 4
Number of Companies 6
Nature Of Business 6
Samsung 6
Vivo 6
Infinix 7
Huawei 7
Apple iPhone 7
Total capital of companies 8
CEO duality 9
Board Size 10
Non-executive directors 10
Family concentrated ownership 11
Independent audit committee 12
Cross directorship 13
Year of data 13
Data taken source 14
Conclusion 14
3
Introduction of Project
In this project, we will Annalise the level of corporate governance in
different corporations in same sectors on base of different studies in
these corporations like, CEO duality, board size, Non-Executive
directors in board, Family concentrated ownership, independent audit
committee, Cross directorship.
Corporate Governance
Corporate governance is the system of rules, practices, and processes by
which a firm is directed and controlled. Corporate governance
essentially involves balancing the interests of a company's
many stakeholders, such as shareholders, senior management executives,
customers, suppliers, financiers, the government, and the community.
Since corporate governance also provides the framework for attaining a
company's objectives, it encompasses practically every sphere of
management, from action plans and internal controls to performance
measurement and corporate disclosure.
Governance refers specifically to the set of rules, controls, policies, and
resolutions put in place to dictate corporate behavior. Proxy advisors and
shareholders are important stakeholders who indirectly affect
governance, but these are not examples of governance itself. The board
of directors is pivotal in governance, and it can have major ramifications
for equity valuation.
However, it had also been argued that under the mandatory corporate
governance regime the costs of compliance might exceed benefits. With
the underlying "One size fits all" approach, it lacks flexibility especially
important and relevant for the small companies, foreign multinationals
and non-regulated institutions. Further, the mandatory regulations may
reduce the incentives for companies to list and participate in public
markets.
The draft code outlines comply or explain approach except for certain
requirements, which are mentioned as "mandatory". The mandatory
5
The new reshaping governance framework is built on trust. The trust that
companies would be committed to the best corporate governance
practices and the trust that the regulators and other stakeholders would
consider reasonable and justifiable explanations of companies as right
course of action. However, consistent with the international practices on
the comply or explain based governance approach, a guidance material
for the companies, providing the tools and techniques in ensuring the
compliance and guiding justifiable reasoning and explanation would be
required.
Number of Companies
1. Samsung mobile
2. Vivo Mobile
3. Infinix Mobile.
4. Huawei
5. Apple iPhone.
Nature of Business
Samsung Mobile
South Korean company that is one of the world's largest producers of
electronic devices. Samsung specializes in the production of a wide
variety of consumer and industry electronics, including appliances,
digital media devices, semiconductors, memory chips, and integrated
systems.
Vivo Mobiles
Vivo is a Chinese technology company headquartered
in Dongguan, Guangdong that designs and develops smartphones,
smartphone accessories, software and online services. The company
develops software for its phones, distributed through its V-Appstore,
with I Manager included in their proprietary, Android-based operating
system, Funtouch OS. Vivo is an independent company and develops its
own products. It has 10,000 employees, with research and development
centers in Shenzhen, Guangdong, and Nanjing, Jiangsu.
7
Infinix Mobile
Infinix is a Hong Kong based smartphone manufacturer and a subsidiary
of the Transsion Group. Established in 2013, Infinix has already
established itself as a leading player in the smartphone/tablets market.
Infinix has R&D centers in France and Korea and has manufacturing
centers in China along with local subsidiaries in 60 countries worldwide.
Huawei Mobile
Apple iPhone
Table # 1
Samsung
Apple
Huawei
Vivo
Infinix
Table # 2
CEO Duality
CEO duality refers to the situation when the CEO also holds the position
of the chairman of the board. The board of directors is set up to monitor
managers such as the CEO on the behalf of the shareholders. They
design compensation contracts and hire and fire CEOs.
Agency theory suggests that CEO duality is bad for performance
because it compromises the monitoring and control of the CEO.
Stewardship theory, in contrast, argues that CEO duality may
be good for performance due to the unity of command it presents.
A strong power in the CEO duality actually is good because it can create
a clear direction of a single leader, but on the other hand, it is also
a disadvantage of CEO duality. This is because if a person has enormous
power within a company then it will create segregation of duty.
Table #3
Board Size
Board size refers to the total number of directors on the board of each
sample firm, which is inclusive of the CEO and Chairman for each
accounting year. This will include outside directors, executive directors
and non-executive directors. According to the Corporate Library's study,
the average board size is 9.2 members, and most boards range from three
to 31 members. Some analysts think the ideal size is seven. In addition,
two critical board committees must made up of independent members:
The compensation committee. A large number of members represents a
challenge in terms of using them effectively and/or having any
meaningful individual participation. According to the Corporate
Library's study, the average board size is 9.2 members, and
most boards range from three to 31 members. Some analysts think
the ideal size is seven.
Table #4
Table #5
Table #6
Table # 7
Cross Directorship
A cross directorship defines when the director of one company is also
the director of another company or companies. Often, creditors are
unaware that the director of a company who they are doing business
with is also the director of one or multiple companies elsewhere.
Table #8
Conclusion
On the basis of above discussion on several factors for the analysis of
corporate governance by data form different sources, annual reports and
tables we come to know that the level of corporate governance is very
strong and effective in above corporations. As level of CEO duality does
not exists in any of the above companies, as its main disadvantage is
unfairness if any fraud happens and very less variations and lack of new
ideas.