Corporate governance principles and entrepreneurship firms

V.Darškuvienė

Vytautas Magnus University Kaunas

Conceptual issues• Academic and policy debates

On principal-agent relationship On information asymmetry

Greater effectiveness of the system, lowering transaction costs if agency relationships are regulated

▫Corporate governance as a goal itself▫vs

▫Corporate governance as a tool to improve firm performance, concentrate on growth, innovation, sustainability, survival

Good corporate governance•Max SHV•Constructing the framework•Clear & credible principles•Aligning shareholder interests

Based on

▫Independent boards – goal & strategic direction setting

▫Transparent financial reporting - accountability

Corporate governance development

Codes Principles

For unlisted

companiesFor listed

companies

Major contributionto growth &

employment

Applicability of CG principles• Listed vs unlisted companies?• Large vs SMEs companies?

Are there connections between corporate governance and entrepreneurship?

What might be the implications of adoption of corporate governance principles to entrepreneurship firms?

Conceptual issues

•Conditions for value creation

Entrepreneurship culture Developing organizational framework Incentives for different stakeholders (incl. employees)

Protection of innovative initiatives

The necessity of good corporate governance for SMEs

•Need to access to financial resources for growth

•Need for effective strategies and their implementation

•Introduction of professional management•Proper remuneration and retaining key

employees

Key objectives of CG codes / principles

“Equal” understandi

ng of transparent managemen

t

Improving information disclosure

Increasing managemen

t quality

Enhancing confidence

of international

investors

Development towards - Principles for unlisted companies, phase 1

Governance frameworkBoard effectiveness, size, compositionRemuneration policy

Risk oversight and internal controlDialogue between board and investorsSkills of board members

Family governance mechanisms

Are major concerns addressed?•Long-term vs short term interests of

stakeholders?

•Transferability of shares / succession planning?

•Conflict resolution procedures?

•Transparency?

•Encouraging creativity and innovation?

Corporate governance regulation impact

Incentives

Restrictions

Entrepreneurship firms