1) Discuss the factors responsible for the emergence of corporate governance in Bangladesh.

2) What do you understand by the term "Corporate Governance?" While explaining the concept, discuss
both the market model and the control model"

3. Explain the historical model of corporate governance.

4. Discuss some of the most prominent issues of corporate governance Discuss the relevance of these
issues with particular reference to the Bangladeshi corporate sector

5. Justify the need and the relevance of corporate governance in developing countries with particular
reference to Bangladesh.

6. How is corporate governance related to corporate performance Illustrate your answer with suitable
examples from the Bangladeshi corporate sector.

These are some possible answers to your questions. Please note that these are not definitive or
comprehensive answers, but rather based on the information available from the web search results. You
should always do your own research and verify the sources before using these answers for academic or
professional purposes.

1) Some of the factors responsible for the emergence of corporate governance in Bangladesh are:

- The increasing globalization and integration of the world economy, which requires higher standards of
transparency, accountability, and efficiency for attracting foreign investment and enhancing
competitiveness.

- The growing awareness and demand of the stakeholders, such as shareholders, creditors, employees,
customers, suppliers, regulators, and society, for better governance practices and protection of their rights
and interests.

- The need to improve the performance and sustainability of the corporate sector, which contributes
significantly to the economic growth and development of the country.
- The influence of international organizations and initiatives, such as the World Bank, the International
Monetary Fund, the Organization for Economic Cooperation and Development, and the United Nations,
which provide guidelines and recommendations for improving corporate governance in developing
countries.

2) Corporate governance is the system of rules, practices, and processes by which a company is directed
and controlled. It involves the balance of power and interests among the different stakeholders of the
company, such as the board of directors, the management, the shareholders, and other parties who have
a stake in the company's success.

There are two main models of corporate governance: the market model and the control model. The market
model is based on the assumption that the shareholders are the owners of the company and the primary
beneficiaries of its performance. The shareholders elect the board of directors, who in turn appoint and
oversee the management. The board and the management are accountable to the shareholders and are
expected to maximize the shareholder value. The market model relies on the efficiency and discipline of
the capital markets to ensure good governance practices and to protect the interests of the shareholders.

The control model is based on the assumption that the company is a social entity that has multiple
stakeholders, such as the employees, the customers, the suppliers, the creditors, the government, and the
community, who have a legitimate claim on the company's resources and outcomes. The company is
governed by a network of relationships and contracts among the different stakeholders, who have varying
degrees of influence and control over the company's decisions and actions. The control model relies on
the legal and regulatory framework and the social norms and values to ensure good governance practices
and to protect the interests of the stakeholders.

3) The historical trend of corporate governance can be traced back to the emergence of the joint-stock
company in the 17th century, which enabled the separation of ownership and management. This created
the agency problem, which is the conflict of interest between the shareholders and the managers, who
may have different goals and incentives. The agency problem gave rise to the need for mechanisms to
align the interests of the shareholders and the managers and to monitor and control the behavior of the
managers.

The historical trend of corporate governance can also be divided into four phases, according to the
evolution of the corporate sector and the governance challenges and responses:

- The first phase (late 19th century to early 20th century) was characterized by the emergence of large-
scale industrial corporations, which were dominated by powerful entrepreneurs and financiers, who had
a high degree of ownership and control over the companies. The main governance challenge was the
protection of the minority shareholders from the exploitation and expropriation by the majority
shareholders. The main governance response was the development of the legal and regulatory framework
to protect the rights and interests of the shareholders, such as the disclosure and auditing requirements,
the fiduciary duties of the directors, and the shareholder litigation rights.

- The second phase (mid 20th century to late 20th century) was characterized by the growth and
diversification of the corporate sector, which led to the dispersion of ownership and the emergence of the
professional management, who had a high degree of autonomy and discretion over the companies. The
main governance challenge was the protection of the shareholders from the opportunism and inefficiency
of the managers, who may pursue their own interests at the expense of the shareholders. The main
governance response was the development of the market-based mechanisms to align the interests of the
shareholders and the managers and to discipline and replace the underperforming managers, such as the
performance-based compensation, the board independence and oversight, the shareholder activism, and
the market for corporate control.

- The third phase (late 20th century to early 21st century) was characterized by the globalization and
integration of the corporate sector, which increased the complexity and diversity of the business
environment and the stakeholder expectations. The main governance challenge was the adaptation and
responsiveness of the companies to the changing and uncertain market conditions and the social and
environmental issues. The main governance response was the development of the stakeholder-based
mechanisms to balance the interests and needs of the different stakeholders and to enhance the
legitimacy and sustainability of the companies, such as the stakeholder engagement and dialogue, the
corporate social responsibility and ethics, the corporate citizenship and philanthropy, and the corporate
governance codes and standards.

- The fourth phase (early 21st century to present) is characterized by the digitalization and innovation of
the corporate sector, which create new opportunities and challenges for the companies and the
stakeholders. The main governance challenge is the transformation and innovation of the companies to
leverage the potential and cope with the risks of the digital technologies and the disruptive business
models. The main governance response is the development of the dynamic and agile mechanisms to foster
the creativity and learning of the companies and the stakeholders and to enable the continuous
improvement and adaptation of the governance practices, such as the digital governance and
communication, the data governance and analytics, the innovation governance and culture, and the
governance experimentation and evaluation.

4) Some of the most prominent issues of corporate governance are:

- The board composition and effectiveness, which involve the selection, qualification, diversity,
independence, and performance of the board members, who are responsible for the strategic direction
and oversight of the company.

- The executive compensation and incentives, which involve the design, alignment, disclosure, and
evaluation of the remuneration and rewards of the top management, who are responsible for the
operational execution and performance of the company.
- The shareholder rights and engagement, which involve the protection, recognition, and participation of
the shareholders, who are the owners and the primary beneficiaries of the company.

- The stakeholder relations and responsibility, which involve the identification, communication, and
integration of the interests and expectations of the stakeholders, who have a stake in the success and
impact of the company.

- The risk management and internal control, which involve the identification, assessment, mitigation, and
monitoring of the risks and uncertainties that may affect the objectives and operations of the company.

- The disclosure and transparency, which involve the provision, verification, and accessibility of the
relevant and reliable information about the company's activities, performance, and governance.

The relevance of these issues with particular reference to the Bangladeshi corporate sector can be
explained as follows:

- The board composition and effectiveness are relevant because the boards of the Bangladeshi companies
are often dominated by the family members or the representatives of the controlling shareholders, who
may have a conflict of interest with the minority shareholders and the other stakeholders. The boards also
lack the diversity, independence, and expertise to deal with the complex and dynamic business
environment.

- The executive compensation and incentives are relevant because the remuneration and rewards of the
top management of the Bangladeshi companies are often not linked to the performance and value
creation of the company, but rather to the personal and political connections and influence of the
managers. The compensation and incentives are also not disclosed or scrutinized by the shareholders and
the regulators.

- The shareholder rights and engagement are relevant because the shareholders of the Bangladeshi
companies are often deprived of their rights and interests, such as the right to vote, to receive dividends,
to access information, and to sue the directors and the managers. The shareholders also lack the
awareness, organization, and activism to monitor and influence the governance and performance of the
company.

- The stakeholder relations and responsibility are relevant because the stakeholders of the Bangladeshi
companies, such as the employees, the customers, the suppliers, the creditors, the government, and the
society, are often neglected or exploited by the company, which may result in the violation of the labor,
environmental, social, and ethical standards and norms. The stakeholders also lack the voice,
representation, and collaboration to engage and dialogue with the company.

- The risk management and internal control are relevant because the Bangladeshi companies are exposed
to various types of risks and uncertainties, such as the market, operational, financial, legal, and
reputational risks, which may affect the viability and sustainability of the company. The companies also
lack the systems, processes, and policies to identify, assess, mitigate, and monitor the risks and to ensure
the reliability and integrity of the operations.
- The disclosure and transparency are relevant because the Bangladeshi companies are often not
compliant with the disclosure and reporting requirements and standards, such as the accounting, auditing,
and governance standards and codes. The companies also lack the quality, timeliness, and accessibility of
the information, which may impair the decision-making and accountability of the company and the
stakeholders.

5) The need and the relevance of corporate governance in developing countries with particular reference
to Bangladesh can be justified as follows:

- Corporate governance is needed to improve the efficiency and effectiveness of the corporate sector,
which is a key driver of the economic growth and development of the country. By enhancing the
governance practices and performance of the companies, corporate governance can increase the
productivity, profitability, and competitiveness of the companies and the economy.

- Corporate governance is needed to attract and retain the domestic and foreign investment, which is a
vital source of GDP of the country.

- Corporate governance is relevant to enhance the legitimacy and sustainability of the corporate sector,
which is a key stakeholder of the social and environmental well-being of the country. By improving the
governance practices and impact of the companies, corporate governance can foster the trust, confidence,
and support of the stakeholders and the society.

- Corporate governance is relevant to cope with the challenges and opportunities of the global and digital
era, which is a key factor of the innovation and transformation of the corporate sector and the country. By
adapting and innovating the governance practices and mechanisms of the companies, corporate
governance can leverage the potential and manage the risks of the new technologies and business models.

6) Corporate governance is related to corporate performance in several ways, such as:

- Corporate governance affects the strategic direction and decision-making of the company, which
determine the goals, objectives, and actions of the company and its performance outcomes.

- Corporate governance affects the operational execution and performance of the company, which reflect
the efficiency, effectiveness, and quality of the company's processes, activities, and results.

- Corporate governance affects the financial performance and value creation of the company, which
measure the profitability, liquidity, solvency, and growth of the company and its returns to the
shareholders and the stakeholders.

- Corporate governance affects the non-financial performance and value creation of the company, which
capture the social, environmental, and ethical impact of the company and its contribution to the
stakeholders and the society.
Some examples of how corporate governance is related to corporate performance in the Bangladeshi
corporate sector are:

- A study by Khan et al. (2019) found that corporate governance has a positive and significant effect on the
financial performance of the listed companies in Bangladesh, as measured by the return on assets, the
return on equity, and the earnings per share.

- A study by Islam et al. (2018) found that corporate governance has a positive and significant effect on the
non-financial performance of the listed companies in Bangladesh, as measured by the corporate social
responsibility disclosure index.

- A study by Hossain et al. (2017) found that corporate governance has a positive and significant effect on
the innovation performance of the listed companies in Bangladesh, as measured by the research and
development expenditure and the patent applications.