CHAPTER 1

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* Based on Midterms Exam Coverage

UNIT 1 – CORPORATE GOVERNANCE SEVEN (7) characteristics IN DETAIL

1. PARTICIPATION
INTRODUCTION TO CORPORATE  By both men and women:
GOVERNANCE KEY CORNERSTONE
 Direct or Through Legitimate Institutions or
Representatives
o Representative democracy: does
not necessarily mean that the
 Process whereby elements in society concern of the most vulnerable in
wield society would not be taken into
o POWER consideration in decision making.
o AUTHORITY and  Needs to be INFORMED and ORGANIZED
o INFLUENCE o Freedom of association and
and enact policies and decisions expression on one hand and an
concerning public life and social upliftment. organized civil society on the
 Comprises ALL process of GOVERNING other hand
 Process of DECISION-MAKING
 Process by which decisions are
IMPLEMENTED OR NOT through the 2. RULE OF LAW
exercise of power or authority by leaders
 Fair legal frameworks = enforced
of the country and/or organizations.
impartially
 Corporate Governance, International
 Requires full protection of
Governance, National Governance and
o Human rights (minorities)
Local Governance
 Impartial Enforcement: requires
independent judiciary and impartial and
incorruptible officer

SEVEN (7) characteristics:

TRANSPARENCY
Participation  Decisions taken and their enforcement =
FOLLOWS RULES AND REGULATIONS
Rule of Law  Information: freely available and directly
accessible to those who will be affected
Transparency by such decisions and their enforcement.
 Enough information is provided in an
easily understandable forms and media
Responsiveness

Consensus Oriented
RESPONSIVENESS
Equity and Inclusiveness  Institutions and processes: try to serve the
needs of stakeholders within a
Effectiveness and Efficiency reasonable timeframe

Accountability
 CONSENSUS ORIENTED
 Mediation of the different interests in
society = BROAD CONSENSUS on what is
in the best interest of the whole
community and how this can be
achieved.
 Broad and long-term perspective on
what is needed for sustainable human
development and how to achieve the
goals of such development.
 CAN ONLY RESULT FROM
UNDERSTANDING:
o Historical
o Cultural
o Social Contexts
of a given society of community

EQUITY AND INCLUSIVENESS

 Ensures = ALL MEMBERS have a stake and

do not feel excluded
 Requires ALL groups: particularly the most
vulnerable, have opportunities to
improve or maintain their well-being.

EFFECTIVENESS AND EFFICIENCY

 Processes and institutions produce results

= meets the need of society while making
the best use of resources at their disposal.
 Efficiency – sustainable use of natural
resources and the protection of the
environment

ACCOUNTABILITY
 KEY REQUIREMENT (GG)
 Not only governmental institutions BUT
ALSO private sector and civil society orgs
= ACCOUNTABLE TO THE PUBLIC AND TO
THEIR INSTITUTIONAL STAKEHOLDERS
 Orgs/Institutions = Accountable to those
who will be affected by its decisions or
actions.
 Cannot be enforced without
TRANSAPARENCY & THE RULE OF LAW