MODELS OF CORPORATE GOVERNANCE

Capital Industrial Entrepreneurial

Market Model Model Corporate Model

FOCUS Primarily driven by the interests of Centers around the interest of various stakeholders including Centers around the vision and innovation of a founding
shareholders and financial markets. employees, suppliers and the local community entrepreneur or a small group of entrepreneurs.

Characterized by close relationships between companies, Often characterized by a flexible and dynamic
Governance Emphasizes transparency, accountability
Structure and efficiency to attract and retain investors. suppliers and local institutions, often with significant organizational structure that encourages risk- taking
government involvement. and innovation.

Decision Decisions are often based on maximizing

Making Decisions may prioritize long- term stability, employment Decisions are made to support the entrepreneur’s vision
shareholder value and achieving short-term
retention and regional development over immediate often focusing on long- term growth and market
financial goals.
financial gains. disruption.

Many publicly traded companies in

Commonly found in countries with strong industrial
Example developed economies operate under this conglomerates. Many start-ups (developing) and technology
model. companies operate under this model.
JAPAN and SOUTH KOREA
USA, CANADA, UK WESTERN EUROPE, EAST ASIA AND GENERALLY IN MOST
DEVELOPING ECONOMIES.
 CONNECTION BETWEEN FINANCIAL MANAGEMENT AND GOOD GOVERNANCE

TRANSPARENCY AND ACCOUNTABILITY ETHICAL STANDARDS AND INTEGRITY RISK MANAGEMENT

Financial management involves maintaining Financial management encompasses Financial management involves identifying,
accurate records, producing timely financial adhering to ethical standards in financial assessing, and managing financial risks to
reports, and ensuring transparency in decision-making, including honesty, safeguard the organization's assets and
financial transactions. integrity, and fairness. financial stability.

Good governance requires effective risk

Good governance requires transparency and Good governance is founded on ethical
management practices to anticipate and
accountability in decision-making processes behavior and integrity in all aspects of
mitigate risks that may affect the
to ensure that actions are in the best interest organizational operations, including financial
organization's ability to achieve its
of stakeholders. management.
objectives.

COMPLIANCE AND REGULATIONS STRATEGIC PLANNING AND STAKEHOLDER ENGAGEMENT

Financial management entails compliance RESOURCE ALLOCATION Financial management involves
with relevant laws, regulations, and communicating financial information to
Financial management involves strategic
accounting standards to ensure legal and stakeholders, including shareholders,
planning and resource allocation to optimize
regulatory requirements are met. This employees, creditors, and regulators.
the use of financial resources and achieve
includes financial reporting standards such
organizational objectives.
as GAAP or IFRS. Good governance emphasizes stakeholder
engagement and participation in decision-making
Good governance necessitates compliance Good governance requires strategic decision-
processes to ensure that diverse perspectives are
with legal and regulatory frameworks to making and effective resource allocation to
considered and stakeholders' interests are
uphold the rule of law and maintain the align organizational goals with stakeholder
represented.
organization's credibility. interests.