- 1. Good Ethics Is GoodBusinessPresentation byMr. Graham
SettleSenior GovernanceSpecialist Asian Development Bank Corporate
Governance Conference28 January 2005, Mandarin Oriental Hotel,
Makati City
2. Why is ADB ConcernedWith Corporate Ethics? Corporate ethics:
key to private sectordevelopment Private sector: key to
broad-basedgrowth Broad-based growth: key to povertyalleviation 3.
Good Corporate Ethics:Who and What? State role: Clear rules and
rights"Every kind of peaceful cooperation among men is
primarilybased on mutual trust and only secondarily on
institutionssuch as courts of justice and police." -- Albert
Einstein (18791955) Private role: Keep promises to stakeholders 4.
What is Most Important Source of Funds? EarningsRevenuesCustomers
Trust 5. Ethics are EspeciallyImportant in Capital Markets Time
horizons beyond the real economy The product is intangible 6.
Benefits of CorporateShareholding Hedge against individual failure
Corporation as legal person Rewards w/o having to be there Shares
allow liquidity anddiversification 7. Costs of Corporate
Shareholding Ownership is not control Principal-Agent conflict 8.
History ofCorporate EvolutionThe Good, Bad, and Ugly 9. Lessons
From History Regulator of first resort iscompetition Artificial
confidence is harmful Artificial cures can cause harm Organic
growth based on trust 10. A SELECT HISTORY OF CORPORATEREGIONAL
INFLUENCEASIA EUROPEEVOLUTION AMERICAASIA 1602 1720 1987BLACK
MONDAYom OCT. 19, 1987 t.c 1932 Do1920MILESTONES The DutchSouth Sea
East IndiaBubbleBlackThe Match KingMonday CompanyGreatest Fraud The
Ponzi1720AmericanScheme in History 1997 Model 19291980sFirst
Special Purpose Vehicle1637Bill ofExchange MississippiSavings &
AsianScheme RobberThe Great Loan Crises Currency TulipmaniaBarrons
CrashCrisis 5000-3000 BC 9th Century10th-15th Century 1494
160216371720 1721 1820 1862-19131920 19291932 1934 1980s1990s
2000sTIME18902002193414941721 FederalSarbanesAntitrustSEC Act
OxleyThe Wheel Invention ofBubbleChronometerAct 1913
Federal1934Double Entry Reserve Discovery
ofAccounting1989Federalthe Number Late Deposit ZeroLate1700s
Insurance1800s World Wide Web Modern SteamKeyStateEngineElectricity
Innovations RegulationFutureCEO asShips Captain Monarch
MonopolyState Monopoly Professional ManagerBureaucrat Corporate
Raiders & Regulators Super RichCelebrity?10th-17th
Century1600s-1820s 1820s-1920s 1930s-1970s1980s 1990s 11. 21
Century stReputation for Trust is a Private BrandThere is virtually
no evidence of successfulcapital market reforms where the
foundations oftrust are the exception rather than the rule.-- Alan
Greenspan