Governance Business Risk and Internal ▸ Strong corporate governance is
Control founded on the principles of fairness,
accountability and transparency. It is Corporate Governance key to increasing the global What is CORPORATE GOVERNANCE? competitiveness of Philippine corporations in a manner that optimizes ► Corporate Governance is the long term value to the company and its application of best management shareholders, as well as recognizes the practices, compliance to law in true role of its various stakeholders. letter and spirit, and adherence to ethical standards for effective management and What is the purpose of corporate distribution of wealth and discharge of governance? social responsibility for sustainable ► To facilitate effective entrepreneurial development of all stakeholders. and prudent management that can ► Corporate governance is the system deliver long-term success of the of rules, practices, and processes by company which a firm is directed and controlled. ► To enhance shareholders' value and ► Corporate governance essentially protect their interests by improving the involves balancing the interests of a corporate performance and company's many stakeholders, such as accountability. shareholders, senior management executives, customers, suppliers, 1. Fair and Equitable Treatment of financiers, the government, and the Shareholders community. ► A corporate governance structure ► The corporate governance structure ensures equitable and fair treatment of specifies the distribution of rights and all shareholders of the company. responsibilities among different ➤ Although there are high net-worth participants in the corporation such as individuals, groups or institutions who the board, managers, shareholders, and have substantial proportion of their other stakeholders and spells out the portfolios invested in the company and rules and procedures for making therefore occupy top level positions that decisions on corporate affairs. enable them to guard their interests, ➤ It also provides the structure however, a good governance structure through which the objectives are set and should ensure that all shareholders the means of achieving those objectives deserve equitable treatment and this and monitoring performance. equity is safeguarded. ► Corporate governance is the structure of rules, practices, and 2. Self-assessment processes used to direct and manage a ► Corporate governance enables firms company. A company's board of to assess their behavior and actions directors is the primary force influencing before they are scrutinized by regulatory corporate governance. Bad corporate agencies. governance can cast doubt on a ► Business establishments with strong company's operations and its ultimate corporate governance system are better profitability. able to limit exposure to regulatory risks and fines. How does corporate governance help ► An active and independent t board companies in the Philippines? can successfully point out deficiencies or loopholes in the company operations and help solve issues internally on a 1. TRANSPARENCY AND FULL timely basis. DISCLOSURE
3. Increase shareholder's wealth Does the Board meet the information
► Protect the long-term interests of the needs of investment communities? shareholders. ► Does it safeguard integrity in ► Firms with strong corporate financial reporting? governance structure are seen to have ► Does the board have sound disclosure higher valuation attached to their shares policies and practices? by businessmen. This only reflects the Does it make timely and balanced positive perception that good corporate disclosure? governance induces potential investors Can an outsider meaningfully analyze to decide to invest in a company. the organization's actions and performance? 4. Transparency and full disclosure ► Good corporate governance aims at 2. ACCOUNTABILITY ensuring a high degree of transparency ► Does the Board clarity its roles and in an organization by encouraging full that of management? disclosure of transactions in the ► Does it promote objective, ethical company accounts. and responsible decision making? ► Does it lay solid foundations for BASIC PRINCIPLES OF management oversight? EFFECTIVE CORPORATE ► Does the composition mix of board GOVERNANCE membership ensures an appropriate range and mix of expertise, diversity, * TRANSPARENCY AND FULL knowledge, and added value? DISCLOSURE ▸ is the organization's senior officials *ACCOUNTABILITY committed to widely accepted standards *CORPORATE CONTROL of correct and proper behavior?
1. TRANSPARENCY AND FULL 3. CORPORATE CONTROL
DISCLOSURE The term "corporate control" refers to ► Full disclosure is when we share the authority to make the decisions of a everything we know with our corporation regarding operations and stakeholders. strategic planning, Including capital ► Transparency, however, is focused on allocations, acquisitions and investments, what our stakeholders need to know. It top personnel decisions, and major requires us to understand them and, most marketing, production, and financial importantly, make a few judgment calls decisions. on what works best for the particular ▸ Has the Board build long-term context. sustainable growth in shareholders' ► Transparency, leading to full value for the corporation? disclosure as both action and behavior, ► Does it create an environment to is understood in corporate governance as take risk? establishing standards of corporate ► Does it encourage enhanced ethics to deter unscrupulous corporate performance? practices while preserving a fair ► Does it recognize and manage risk? business environment. ► Does it remunerate fairly and responsibly? ► Does it recognize the legitimate interests of stakeholders? ►Trustworthiness and promise keeping ▸ Are conflicts of Interests avoided ► Loyalty and confidentiality such that the organization's best interests ► Fairness and openness prevail at all times? ► Caring for others ► Respect for others BASIC PRINCIPLES OF ► Responsible citizenship CORPORATE GOVERNANCE AND BEST PRACTICES WHY IS ETHICAL BEHAVIOR RECOMMENDATIONS NECESSARY? ► Ethical behavior is necessary for a Principles of Good Corporate society to function in an orderly manner. Governance What would happen if for example we A company should lay solid foundation cannot depend on the people we deal for management and publish the with to be honest. If parents, teachers, respective roles and management employees, co-workers and friends all responsibilities of board and consistently lied. ➤ Many company had ethical values are Structure that board to add value. Have a incorporated into laws. Example, driving board of an effective composition, size, while intoxicated, selling defective and commitment to adequately products, etc discharge is responsibilities and duties. ► However, a considerable portion of the ethical values cannot be incorporated Best Practice Recommendations into laws because of the judgmental a. Formalize and disclose the functions nature of certain values. It is very reserved to the board and those difficult to establish meaningful laws delegated to management. related to integrity, loyalty, pursuit of a. A board should have independent excellence. directors b. The roles of chairperson and chief WHY DO PEOPLE ACT executive officer should not be exercised UNETHICALLY? by the same individual. 2 PRIMARY REASONS: ETHICS defined ► 1. The person's ethical standards are ► Ethics is a set of moral principles or different from those of the general values that govern the actions and society. Examples are drug dealers, bank decisions of an individual and group. robbers. Most people who commit such ➤ Examples of prescribed set of moral acts feel no remorse when they are principles include laws and regulations, apprehended, because their ethical church doctrine, code of ethics for standards differ from that of the society professional groups such as teachers, as a whole CPAs, nurses, lawyers, etc. > 2. the person chooses to act selfishly. A considerable portion of unethical CHARACTERISTICS AND behavior results from selfish behavior., VALUES ASSOCIATED WITH Pork barrel scam, corruption, financial ETHICAL BEHAVIOR greed. ► Integrity - Pursuit of excellence CATEGORIES OF ETHICAL > Honesty PRINCIPLES >accountability ► Principle of Personal Ethics 2. To show businessmen that common basic justice, fairness practices which they have thought to be respect for the right of others right because they see other concern for the right of others businessmen doing it. concern for the welfare of others 3. To serve as a standard or ideal upon benevolence, trustworthiness, which business conduct honesty compliance with the law
►Professional Ethics integrity, impartiality, objectivity professional competence confidentiality professional behavior avoidance of conflict of interest
► Business Ethics fair competition social responsibility concern for the environment
Business Ethics defined
- Business ethics refers to standards of moral conduct, behavior, and judgement in business -It involves making the moral and right decisions while engaging in such business activities as manufacturing or selling a product or providing a service to customers. -Business ethics is an area of corporate social responsibility where businesses are legally bound and socially obligated to conduct business in an ethical manner. -Business ethics is based on the personal values and standards of each person engaged in business.
Purposes of Business Ethics
Main Purpose >The main purpose of business ethics is to help business and would be business to determine what business practices are right and what are wrong. Special Purposes 1. To make businessmen realize that they cannot employ double standards to the actions of other people and to their own actions.
