Ethics in corporate governence.ppt

BYHARDEEP SHARMA

Corporate governance is the set of policies, people, laws,regulations and reporting of corporate business entities. It is aprimary focus of regulators in today’s world. Sound corporategovernance brings prosperity to the masses in the economy byraising investor confidence and proper management of theinvestments. Good corporate governance is vital fororganizations to survive.

Corporate Governance is defined as the general set of customs,regulations, policies and laws that determine to achieve certaintargets for which a firm should be run. It is clear that corporategovernance exists at a complex intersection of law, morality andeconomic efficiency, considering that issues of executivecompensation, financial scandals and shareholder activism areall tied up with it. All parties to corporate governance have aninterest, whether direct or indirect, in the effective performanceof the organization. Directors, workers and management receivesalaries, benefits and reputation, while shareholders receivecapital return, customers receive goods and services andsuppliers receive compensation for their goods or services.

Ethics refers to a system of moralprinciples a sense of right and wrong,and goodness and badness of actions andthe motives and consequences of theseactions.Ethics is seen as an individual’s ownpersonal attitude and a believeconcerning what is right or wrong, goodor bad. It is important to note that ethicsreside within individuals and thatorganization doesn’t have ethics. Peoplehave ethics

• No discrimination should be done on the basis of caste ,color , and religion,• The polices should be fair and transparent• Proper provision of safety should be provided by the company to the

employees.• There should be proper honesty, loyalty, and integrity in the employees.• The company’s resources should not be utilized by the employees for their

personal usage.• Company should provide better environment condition Information about

employee’s personal lives, health, and work evaluations should be keptconfidential.

• Regular measurement of employee satisfaction should by company.• To neither give nor take any illegal payment, remuneration, gift, donation,

or comparable, benefits to obtain business or favors.• To comply with all regulations regarding preservation of the environment.• Employee should report to management any actual or possible violation of

code or an event that could affect the business or reputation of theemployee’s company.

Corporate governance exists at a complex intersection of law, morality and economic efficiency, considering that issues of executive compensation, financial scandals and shareholder activism are all tied up with it. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed.

• The Board of Directors • The Upper Management• The Stock holders• The Regulators and other Stakeholder institutions• Reporting• Company Policy• Company Activity• The CEO, Company Secretary, and CFO• Meetings

It focus on what our relationships are and ought to be with our employees, our customers, our stock holders, our creditors, our suppliers, our distributors, our neighbors and other members of the community / society in which we operate.

Questions, like moral responsibilities, obligations and virtues in business decision making also form part of ethics e.g. choices and character of persons, the policies and cultures of organization.

Ethics is concerned with the code of values and principles that enables a person to choose between right and wrong, and therefore, select from alternative courses of action. Further, ethical dilemmas arise from conflicting interests of the parties involved.

a) The liberalization and de-regulation world over gave greater freedom in management. This would imply greater responsibilities.

b) The players in the field are many. Competition brings in its wake weakness in standards of reporting and accountability.

c) Market conditions are increasingly becoming complex in the light of global developments like WTO, removal of barriers/reduction in duties.

d) The failure of corporate due to lack of transparency and disclosures and instances of falsification of accounts/embezzlement and the effect of such undesirable practices in other companies.

• Rights and equitable treatment of shareholders

• Interests of other stakeholders• Role and responsibilities of the

board• Integrity and ethical behavior• Disclosure and transparency

“There are those who will tell you that business andethics cannot stand together. In the short run it mightappear that companies pay a price for adhering to valueswhile their competitors get ahead in a shorter timeframe, but in the long run people would learn todistinguish, stakeholders learn to ask the right questions,and distinguish between the grain and chaff. Those thatdon't subscribe to values will fall by the way side; thosethat subscribe to values will last the course and will setbenchmarks.”

M. Damodaran Chairman, Securities and ExchangeBoard of India

• Several corporate governance structures• Extends beyond corporate law• The committee has primarily focused on investors

and shareholders.• Committee believes that its recommendations will go

a long way in raising the standards of corporate governance

Committee primarily related to auditcommittees, audit reports, independentdirectors, related parties, risk management,directorships and director compensation,codes of conduct and financial disclosures.

The employees will become more creative

Greater commitment to the employees

Greater loyalty

Brand image for the company

Every individual has to start culturing the human values in the inner world of himself because they say,“Those who can see the deepest into the past can also see farthest into the future”