Global Governance and Corporate Social Responsibility at Hochschule Fulda

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Exemplary flashcards for Global Governance and Corporate Social Responsibility at the Hochschule Fulda on StudySmarter:

What are the drivers of Corporate Governance ?

Exemplary flashcards for Global Governance and Corporate Social Responsibility at the Hochschule Fulda on StudySmarter:

Corporate Governance: 

What does the term mean? 

Exemplary flashcards for Global Governance and Corporate Social Responsibility at the Hochschule Fulda on StudySmarter:

Why is the Corporate governance Code so important?

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Exemplary flashcards for Global Governance and Corporate Social Responsibility at the Hochschule Fulda on StudySmarter:

Principal Agend Theory: 

What is the contribution of the theory?

Exemplary flashcards for Global Governance and Corporate Social Responsibility at the Hochschule Fulda on StudySmarter:

Challenges and possible reactions to principle agent theory

Exemplary flashcards for Global Governance and Corporate Social Responsibility at the Hochschule Fulda on StudySmarter:

Corporate Governance Code: Which laws do exist in Germany? 

Exemplary flashcards for Global Governance and Corporate Social Responsibility at the Hochschule Fulda on StudySmarter:

What kind of problems arise due to the drivers of Corporate governance and in which relation do they stand to each other?
Please explain the interacting between transparency, responsibility and trust.

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Exemplary flashcards for Global Governance and Corporate Social Responsibility at the Hochschule Fulda on StudySmarter:

What are the strengths of the corporate governance code?

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How can the principle agent theory be applied to corporate governance?

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External Framework: What is the overall goal of Corporate Governance?

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What is the common desire of corporate governance codes? What do they have in common?

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What are the three types of rule systems in the different countries concerning corporate governance codes?

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Exemplary flashcards for Global Governance and Corporate Social Responsibility at the Hochschule Fulda on StudySmarter:

Global Governance and Corporate Social Responsibility

What are the drivers of Corporate Governance ?

- Risks (strategic, management, operative)

- Globalization of capital demand: Variety of multinational enterprises using global sales and procurement markets, growing demand or national and international investors, growing relevance of institutional investors

- Changes in decisional and ownership structures (separation of ownership and decision, newly emerged enterprise e.g. privatization)

- Own dynamic (national regulations, diffusion of regulations, different legal structures)

Global Governance and Corporate Social Responsibility

Corporate Governance: 

What does the term mean? 


  • two elements Corporate = Company / Governance = to manage the company 


close to Definition of “Management” - Difference between these two terms
Corporate Governance is built on Trust, Responsibility and Transparency
Corporate Governance is “good and responsible governance” it is made for achieving legal requirements, to create trust and meet the demands of other stakeholders, it is also made to secure the financial performance as a goal
The framework of rules and practices by which a board of directors ensures accountability, fairness, and transparency in a company's relationship with its all stakeholders (financiers, customers, management, employees, government, and the community). Explicit and implicit contracts between the company and the stakeholders. Contracts that are included in our legal system or working contracts. Indirect contracts like competitive law, that employees aren´t allowed to work at a competitor/supplier for a specific period of time, implicit contracts are Code of conduct for example 

Global Governance and Corporate Social Responsibility

Why is the Corporate governance Code so important?

E.g. when a manager leaves the company -> competitive working restrictions, insight knowledge is at least 1 year old until the manager enters the new competitive company, control instruments, financial insentives, internal control meachnisms (supervisory, peer control financial insentives), external control mechanisms (labour market of managers, competition, M&A)

Global Governance and Corporate Social Responsibility

Principal Agend Theory: 

What is the contribution of the theory?

Problem: Makes a difference between two groups of actors: 

1= principal (owners/Shareholders) 2 = agents (manager, executive)

both have a self-interest and common interest, that the company is successful

information asymmetry between both groups, the shareholders can´t control any activity that the managers do, they don´t know exactly if the agent is working on the basis of the theory, even the managers don´t really know what the shareholders are interested in. Agency and Risk sharing problem

Risk sharing problem (siehe oben)
Different risk preferences mean that different decisions are made from the two positions
Assumption: 

- self interest 

- bounded rationality

- risk aversion 

Uncertainty due to:

- quality insecurity 

- hold up 

- moral hazard

- lack of information and different risk attitudes 

Global Governance and Corporate Social Responsibility

Challenges and possible reactions to principle agent theory

Challenges: Hidden Characterisits means that priciples don´t know about the agents, hidden action and hidden information mean that the principle doesn´t know about the actions about the agent, and hidden intentions are also not known from the principle 

Possible Reactions: 

- signaling and screening (agent can send signals about his actions via his cv or communication, the principle can screen the agent during acquisition or an assessment center)

- motivation and incentives (creating bonus systems in short and long term success)

- information and control systems (installing compliance management or whistle blowing systems to reduce information asymmetry)

Global Governance and Corporate Social Responsibility

Corporate Governance Code: Which laws do exist in Germany? 

(Aktiengesetz, Geldwäschegesetz, Gesetz gegen Korruption, arbeitsrechtliche Regelungen etc.)

Global Governance and Corporate Social Responsibility

What kind of problems arise due to the drivers of Corporate governance and in which relation do they stand to each other?
Please explain the interacting between transparency, responsibility and trust.

- fear of losing money, manager and employees are affected by possible career cut (missing opportunities/development etc.)

- customer doubt because of quality, availability

- suppliers face danger of lack of liquidity of company and no partnership anymore.

Trust, Responsibility and Transparency are the three most important factors regarding these upcoming problems when wrong decisions have been made or criminal decisions, all stakeholders are touched by these issues

Global Governance and Corporate Social Responsibility

What are the strengths of the corporate governance code?

- creating trust and meet the demand of shareholders/stakeholders and society

- secure financial performance to meet or overachieve legal requirements

- creating framework and achieve these goals

Global Governance and Corporate Social Responsibility

How can the principle agent theory be applied to corporate governance?

Owner and Decider: Minimizing the problem of information asymmetry and reduce uncertainty 

finding the most efficient contract and avoiding conflicts, detecting them and reducing the different attitudes towards risks. Measuring the behavior of the agents is time and money consuming and difficult


Global Governance and Corporate Social Responsibility

External Framework: What is the overall goal of Corporate Governance?

To secure the right behavior of the company and its members so the company is successful and trustworthy 

Global Governance and Corporate Social Responsibility

What is the common desire of corporate governance codes? What do they have in common?

They all want to create 

- more transparency

- more accountability and to fix it 

- increase investor confidence 

Global Governance and Corporate Social Responsibility

What are the three types of rule systems in the different countries concerning corporate governance codes?

L-Rules: Law, arising from existing laws and are mandatory 

C-Rules: (comply->)Fulfill or explain, either comply or explain why they don't want to fulfill the codes, never let to an exclusion to the stock exchange listing up until now 

R-Rules: Recommendations without special consequences for companies not agree the regulations

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