Beruflich Dokumente
Kultur Dokumente
corporate governance
Presented to:
Ms. Samya
Presented by:
Waseem Akram 005
Maida Rafique 004
Umair safdar
008
M Zia Khalid
003
Awais Mumtaz 007
Contents
History of corporate governance in Pakistan
ICGP
Determinants of Disclosure Quality in Pakistani Corporate Culture
(Article)
Role of independent directors
Quality disclosure
Purpose of disclosure Quality
Implementations
Duality of chairperson
Improving corporate Governance practices in pakistan
Article Review
In this article the five variables has significantly impact ion the
disclosure quality or fair information.
Transparency and disclosure are important components of
corporate governance. The main purpose of this paper is to
examine the corporate governance attributes that explain the level
of disclosure quality of the firms listed on Karachi Stock
Exchange.
Data Methodology
For estimating the relationship between corporate governance
attributes and disclosure quality, we used the multiple
regression technique in this study. The corporate governance
attributes are audit committee independence.
The sample consists of 198 non-financial companies listed on
Karachi stock exchange for the period 2010. Information has
taken from the annual reports of the firms
Code of Corporate
Disclosure
Publication of Quarterly accounts
SPB Panel of auditor
Ethics
Insider trading
Information dissemination
Code of conduct
Confidentiality
Tax or credit defaulter
Training on corporate governance
Practical implications
This study provides a measure of disclosure quality by
constructing a disclosure index for Pakistani listed firms. The
study sees the impact of various corporate governance
variables that may influence the quality of disclosure
practices.
The Pakistan Institute of corporate governance (PICG)
incorporates these findings in reviewing the code of corporate
governance for Pakistani listed firms.
Introduction
Transparency and disclosure are important components of
corporate governance.
Disclosure
is the act of releasing all relevant information relating to a
company that may influence an investment decision. To be listed
on major Karachi stock exchanges, companies must follow all of
the Securities and Exchange Commission's (SEC) disclosure
requirements and regulations. To make investing as fair as possible
for everyone, companies must disclose both good and bad
information.
Disclosure Audience
Those who make use of financial reports are from all walks of
life.
Who make use of accounting information include two primary
and secondary groups
The primary users are divided to investors and credit
providers, while secondary users include various groups such
as government, banks, people, employers, etc.
Quality of Disclosure
Empirical studies do not give precise and specific
differentiation between the quantity and quality of disclosure.
It is generally assumed that the quantity of disclosing
information is an indicator of its quality.
However, some believe that the quality and quantity of
disclosure are separated from each other.
Disclosure Levels
The level of information that must be disclosed partly
depends on the skills (or needs) of users. On FASB, for
example, it is ordained that the information disclosed in
reports must be understandable for the people with relative
understanding about the economic and commercial activities.
The level of disclosure also depends on the standards in this
context.
Primary Information
The following information is mandatory to be disclose
Financial statements
Board structure
Notes to the financial statements
Shareholding pattern
Number of meetings
Cont.
Practices adopted by the listed companies
Relationship between corporate disclosure that is integral to
corporate governance
Five Variables that affect the disclosure of Quality information
Secondary information
PTCL
The privatization of PTCL was also a big corporate scandal.
An ex-Senior Vice President has claimed the privatization as
Pakistan Biggest Financial fraud. PTCL former official
further commented that the deal was closed on 2.6 billion
dollars including U-fone & Paknet, however only U-fone had
enterprise value of more than 6 billion dollars which does not
include assets of U-fone.
Cont.
Moreover, pricing decisions were made through old records
instead of determining current market value, which means, it was
like Buy One Get 2 Free offer. It has been reported further that in
September 2006, when Etisalat had refused to honour the deal.
Supreme Court of Pakistan has already given decision against the
privatization of PSO and Pakistan Steel and if PTCL privatization
gets challenged on true facts, it will bring horrifying results.
Cont.
However SECP counter argument was based on the fact that
ENGRO has had a rich history of sound corporate governance
which satisfied SECP that ENGRO will be responsible in
regards to hygiene issues associated with ENGRO foods. Time
proved that Engro corporate governance was in good practice
and has led to the success of ENGRO foods with products such
as Olpers Milk.
Duality of chairperson
CEO duality (CEO and chairman of the board are represented
by same individual) has been blamed for the failure of firms
to adapt to a changing environment and the poor
performance.
CEO duality refers to the situation when the CEO also holds
the position of the chairman of the board.
Examples
implementtion
For the purpose of implementing corporate governance in Pakistani companies, these steps are
required to remove the poor corporate governance in Pakistani companies. Identification of the
causes of ineffectiveness of INEDs in Pakistani companies.
Changes that required to be introduced in the code.
Steps to be taken to improve the standards of corporate governance.
Handling these issues by other developing countries.
Solution for Pakistani environment.
Financial Reporting and Disclosure
The quality of transparency and disclosure depends crucially on accounting and auditing standards.
Independence of auditing is the keyto ensuring that the information is disseminated reliably and
credibly. The adoption of internationally acceptable accounting standards willcertainly help to
improve thequality of transparency.Good financial reportingsystems facilitate easyaccess
toreliable andcredible information by external investors and help develop confidence in capital
markets.It is also important to assess the prevailing incentives in the market forauditors and
accountants, in order toascertain incentive-compatibility with the requirements of better disclosure
and adoption of standards