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Prelim BM106

The document discusses corporate governance and business ethics. Corporate governance refers to the system of rules and processes that direct and control business corporations, balancing stakeholder interests. Business ethics comprises moral standards and principles like respect, fairness and responsibility that guide ethical business practices.

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Rio Aeron Rillon
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41 views2 pages

Prelim BM106

The document discusses corporate governance and business ethics. Corporate governance refers to the system of rules and processes that direct and control business corporations, balancing stakeholder interests. Business ethics comprises moral standards and principles like respect, fairness and responsibility that guide ethical business practices.

Uploaded by

Rio Aeron Rillon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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INTRODUCTION TO CORPORATE GOVERNANCE

GOVERNANCE
 Governance refers to a process whereby elements in society wield power, authority and influence and
 Enact policies and decisions concerning public life and social upliftment.
 Governance therefore means the process of decision-making and the process by which decisions are
 Implemented (or not implemented) through the exercise of power or authority by leaders of the country and or organizations.

CHARACTERISTICS OF GOOD GOVERNANCE


1. Participation- by both men and women is a key cornerstone, of good governance.
 Participation could be either direct or through legitimate institutions or representative. It is important to point out
that representative democracy does not necessarily mean that the concerns of the most vulnerable in society would
not be taken into consideration in decision making.
2. Rule of law- good governance requires fair legal frameworks that are enforced impartially. It also requires full protection of
human rights, particularly those of minorities.
3. Transparency- means that decisions taken and their enforcement are done in a manner that follows rules and regulations. It
means that information is freely available and directly accessible to those who will be affected by such decisions and their
enforcement.
4. Responsiveness- good governance requires that institutions and processes try to serve the needs of all stakeholders within a
reasonable time-frame.
5. Consensus oriented- good governance requires mediation of the different interests in society to reach a broad consensus on what
is in the best interest of the whole community and how this can be achieved.
6. Equity & Inclusiveness- ensures that all its members feel that have a stake in it and do not feel excluded from the mainstream of
society
7. Effectiveness & Efficiency- good governance means that processes and institutions produce results that meet the needs of society
while making the best use of resources at their disposal
8. Accountability- is a key requirement of good governance. Not only governmental institutions but also the private sector and civil
society organizations must be accountable to the public and to their institutional stakeholders.

CORPORATE GOVERNANCE
 Corporate governance is defined as the system of rules, practices and processes by which business corporations are directed

and controlled. It basically involves balancing the interests of a company’s many stakeholders, such as shareholders, management,
customers, suppliers, financiers, government and the community.

PURPOSE OF CORPORATE GOVERNANCE


 Purpose of corporate governance- The purpose of corporate governance is to facilitate effective, entrepreneurial and prudent

management that can deliver long term success of the company.

OBJECTIVES OF CORPORATE GOVERNANCE


 Fair and equitable treatment of shareholders- A corporate governance structure ensures equitable and fair treatment of all

shareholders of the company.


 Self-assessment- Corporate governance enables firms to assess their behavior and actions before they are scrutinized by

regulatory agencies.
 Increase shareholders wealth
 Another corporate governance main objective is to protect the long-term interests of the shareholders.

 Transparency ad full disclosure- Good corporate governance aims at ensuring a higher degree of transparency in an

organization by encouraging full disclosure of transactions in the company account


Business Ethics

The term Business Ethics refers to a set of moral standards and practices that guides business organisations based on principles like
respect, fairness, trust, and responsibility.

Principles of Business Ethics


1. Accountability- Accountability means businesses taking full responsibility for their actions or practices. This includes any bad
decisions taken or unethical business practices followed during the course of business operations.
2. Care and respect- Mutual respect must be maintained between business owners, employees, and customers. Businesses need to
ensure a safe working space for the employees and encourage a respectful relationship between all stakeholders.
3. Honesty- Transparent communication between business owners and employees is much desired. This characteristic helps build
trust and establish a relationship between employees and the business. Transparency is also applicable to business relationships
with its customers
4. Healthy competition- Businesses should encourage healthy competition in their workforce and reduce conflicts of interest to a
minimum among employees.
5. Loyalty and respect for commitments- All disagreements between businesses and their employees should be resolved internally
away from the eyes of the public. Employees are to stay faithful to upholding the business vision and promoting business brands.
Businesses are also to stay faithful to agreements with employees. Businesses unreasonably interpreting agreements or not
respecting commitments is considered unethical in business practice.
6. Information transparency- Important information disseminated among a business's customers, employees, or partners is to be
provided comprehensively. This includes both positive and negative information, terms and conditions, or any other crucial
information, as it is against business ethics to withhold or hide relevant facts
7. Respect for the rule of law- Corporate laws, rules, and regulations guiding business practices are to be respected and abided by,
as any flouting of such law is considered unethical.

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