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Business Ethics and Corporate Governance: Research Paper
Business Ethics and Corporate Governance: Research Paper
Vol.1,Issue.V/Nov 2011pp.1-4
Research Paper
ABSTRACT
Business ethics are moral principles that define right and wrong behaviour in the word of corporates.
What constitutes right and wrong behaviour in business is determined by public interest groups and corporates. Ethics
refer to the code of conduct that guides and individual while dealing in the situation. It relates to the social rules that
influence people to be honest in dealing with other people.
Employees
Suppliers
Society
Government
Shareholders
E L E M E N T S O F G O O D C O R P O R AT E
GOVERNANCE
Following are the fifteen elements of good corporate
governance:
1.
Dispersed ownership: Although the presence
of a large or majority block-holder is not necessarily a
negative governance issue, a more dispersed ownership
normally tends to be more attractive to investors. Most
important, a company should have no signal
shareholders or group of shareholders who have
privileged access to the business or excessive influence
over the decision- making process.
2.
Transparent ownership: A companies actual
ownership structure should be transparent, providing
adequate public information on breakdown of
shareholdings, identification of substantial/ majority
holders, disclosures on director shareholders, cross
and pyramid holdings, and management shareholders.
3.
One shareholder vote: A company should offer
one share/one vote to all of its shareholders, and have
only a class of shares. All shareholders should receive
equal financial treatment, including the receipt of
equitable share of profits.
4.
Anti-takeover defenses: The company should
not have any share capital, or boards related to anti over
defenses.
5.
Meeting notifications: Shareholders should be
notified at least 28 days prior to each general
shareholder meeting to allow overseas investors to
participate, and online participation should be available
for shareholders.
6.
Board size: The board should neither too big
not too small. Empirical analyses suggest that the
optimal boards size from five to nine members.
7.
Outside directors: Not more than half of the
directors should be executives of the company.
8.
Independent director: At least half of the nonexecutive directors should be independent outsiders.
9.
Written board guidelines: A company should
have its own written corporate governance rule that
clearly describes its vision, value system, and board
responsibilities. Based on the rules, directors and
executives should be fairly remunerated and motivated
to ensure the success of the company.
10.
Board Committees: The board of a company
should also appoint independent committees to carry
out critical functions such as auditing, internal controls,
and top management compensation and development.
11.
Disclosure: Frequent and credible disclosure
and transparency. At a minimum, a company should
provide disclosure
on financial and operating
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