The OECD Principles of Corporate Governance Why Corporate Governance Matters Alexander Karpf Corpora

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The OECD Principles of Corporate Governance
Why Corporate Governance Matters Alexander
KarpfCorporate Affairs Division, OECDGCGF-IFC
PEP SEE Media Corporate Governance Workshop
Belgrade11 May, 2006The views expressed in
this paper are those of the author and do not
necessarily represent the opinions of the OECD or
its Member Countries.
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What is Corporate Governance?

• Corporate governance involves a set of
  relationships between a companys management, its
  board, its shareholders and other stakeholders.
  Corporate governance also provides the structure
  through which the objectives of the company are
  set, and the means of attaining those objectives
  and monitoring performance are determined.

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Moreover

• Good corporate governance should provide proper
  incentives for the board and management to pursue
  objectives that are in the interests of the
  company and shareholders and should facilitate
  effective monitoring, thereby encouraging firms
  to use resources more efficiently.

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Why does Corporate Governance Matter?

• Lower capital costs better management gt
  greater competitiveness private-sector economic
  growth
• Enhanced investor confidence
• Financial stability
• Legitimisation of market economy

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Rationale behind the OECD Principles of Corporate
Governance

• OECD global standard setter
• Governance systems vary widely
• No single model of good corporate governance
  need for a global language
• Common elements and core principles
• Multilateral policy framework
• Follow-up at national and regional level

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Core Elements of the OECD Principles

• Ensuring the basis of an effective Corporate
  Governance framework
• The rights of shareholders and key ownership
  functions
• The equitable treatment of shareholders
• The role of stakeholders in Corporate Governance
• Disclosure and transparency
• The responsibilities of the board

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The Role of the Media

• Credibility
• Awareness-raising among
• Shareholders
• Directors
• Stakeholders
• General public
• Disclosure and publicity
• Promoting CG champions - Naming and shaming

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OECD Promoter of Good Corporate Governance

• Regional Roundtables
• South East Europe
• Eurasia
• Russia
• Latin America
• Asia
• Guidelines on CG of State-Owned Enterprises

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THANK YOU FOR YOUR ATTENTION !
The documents can be downloaded from our Website
at www.oecd.org/daf/corporate-affairs