INTRODUCTION
TO
CORPORATE
GOVERNANCE
CHAPTER 1
Describe what governance involves
o Enumerate
the different contexts in
which governance can be applied
o Name and explain the characteristics of
good governance
o Explain
the meaning, purpose and
objectives of corporate governance
o Know and describe the principles of
effective corporate governance
o Understand how the principles of good
corporate governance can be applied
o
Learning Outcomes
o
Process whereby elements in
society wield power, authority and
influence and enact policies and
decisions concerning public life
and social upliftment
GOVERNANCE
o
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
GOVERNANCE
Participation
Rule of Law
Transparency
Accountability
GOOD
GOVERNANCE
Effectiveness
& Efficiency
Equity &
Inclusiveness
Responsiveness
Consensus
Oriented
CHARACTERISTICS
System of rules, practices, and
processes by which business
corporations are directed and
controlled
o Balancing interests of stakeholders
o
Corporate Governance
o
Specifies the distribution of rights
and
responsibilities
among
different participants in the
corporation
Corporate Governance
To facilitate effective, entrepreneurial
and prudent management that can
deliver long-term success of the
company
o To enhance stakeholders’ value and
protect
the
interest
of
other
stakeholders by improving corporate
performance and accountability
o
Purpose of CG
Fair and equitable treatment of
shareholders
o Self-assessment
o Increase shareholders wealth
o Transparency and full disclosure
o
Objectives of CG
Basic principle of corporate governance
Transparency and Full
Disclosure:
Is the board telling us what
is going on?
Accountability
Is the board taking
responsibility?
Good and Effective
Governance
Corporate Control
Is the board during the
right thing?
CORPORATE
GOVERNANCE
RESPONSIBILITIES
AND
ACCOUNTABILITIES
Chapter 2
Explain the relevance of good governance
to both large publicly-listed companies
and SMEs
o Know
the
relationship
between
shareholders or owners and other
stakeholders
o Identify the parties involved in corporate
governance
o Describe the respective broad rate and
specific responsibilities of the different
parties in a corporate setting
o
Learning Outcomes
Many researches were conducted by
professors in the university
o They have patents and registered
utility models for these products,
processes
o A few outputs are in the market, if
they are in the market at all
o Lacks
technology for production,
marketing difficulties or demand is
inexistent
o
o
To
allow
the
board
and
management the freedom to drive
their organization forward and to
exercise that freedom within a
framework
of
effective
accountability
Essence of Corporate
Governance
o
Anyone who is influenced, whether
directly or indirectly, by the actions
of a company,
Stakeholders
o
Responsible in acting within the
laws of society and to meet various
requirements
of
creditors,
employees, and the stakeholders
BOD and Management
Public Corporation
Shareholders/
Owners
Delegate
Responsibilities
Stakeholders
Board of
Directors
Shareholders
/Owners
Executive
Management
External
Auditors
Operational
Management
Internal
Auditors
Have
accountabilities
Regulators
Society and
Others
Financial performance
o Financial transparency
o Stewardship
o Quality of internal control
o Composition
of the board of
directors and the nature of its
activities
o
Shareholder wants accountability
Choose which accounting principles
best portray the economic substance
of company transactions
o Implement
a system of internal
control that assures completeness and
accuracy of financial reporting
o Ensure that the financial statements
contain accurate and complete
disclouse
o
Management responsibility under
financial reporting
Shareholders
Provide effective oversight through
election of board members, approval
of major initiatives such as buying or
selling stock, annual reports on
management compensation, from the
board
Role and specific responsibilities
Board of Directors
The major representative of stockholders to
ensure that the organization is run
according to the organization’s charter and
that there is proper accountability
Overall operations
Performance
Compliance/Legal Conformance
Role and specific responsibilities
Non-executive or
Independent Directors
The same as the broad role of the
entire board of directors
Role and specific responsibilities
Management
Operations
and
accountability.
Manage the organization effectively;
provide accurate and timely reports to
shareholders and other stakeholders
Role and specific responsibilities
Audit Committees of the
Board of Directors
Provide oversight of the internal and
external audit function and the
process of preparing the annual
financial statements as well as public
reports on internal control
Role and specific responsibilities
Regulators: Board of
Accountancy
Set accounting and auditing standards
dictating
underlying
financial
reporting and auditing concepts; set
the expectations of audit quality and
accounting quality
Role and specific responsibilities
Regulators: Securities
and Exchange
Commission
Ensure accuracy, timeliness, and
fairness of public reporting of
financial and other information for
public companies
Role and specific responsibilities
Regulators: External
Auditors
Perform audit of company financial
statements to ensure that the
statements are free of material
misstatements
including
misstatements that may be due to
fraud
Role and specific responsibilities
Regulators: Internal
Auditors
Perform audits of companies for
compliance with company policies
and laws, audits to evaluate the
efficiency of operations, and periodic
evaluation and tests of control
Role and specific responsibilities
SECURITIES AND
EXCHANGE
COMMISSION CODE
OF CORPORATE
GOVERNANCE
Chapter 3 & 4
Know the sixteen governance responsibilities
of the Board of Directors of publicly-listed
companies
o Explain the meaning of comply and explain
approach
o Describe the three aspects of the Code
o Know what constitutes a competent board
o Understand the composition, functions and
responsibilities of the board committees than
can be established
o Understand
how
independence
and
objectivity of the board can be reinforced and
assessed
o
Learning Outcomes
Understand how the ethical behaviour
of the board can be strengthened
o Describe how the company disclosure
policies and procedures can be
enhanced
o Understand how a company could
increase focus on non-financial and
sustainability reporting
o Explain how a company can promote
a comprehensive and cost-efficient
access to relevant information
o
Learning Outcomes
Understand how integrity, transparency,
and proper governance of a company
could be ensured through effective
internal control system and enterprise
risk management network
o Describe
briefly how a synergic
relationship with shareholders could be
cultivated and promoted
o Explain how the rights of stakeholders
could be respected and how to institute
effective redness for the violation of their
rights
o
Learning Outcomes
o
SEC
Code
Governance.pdf
of
Corporate
INTRODUCTION
TO
ETHICS
Chapter 5
Define ethics
o Enumerate
and describe the basic
characteristics and values associated with
ethical behaviour
o Understand the reasons why people act
unethically
o Give and explain the categories of ethical
principles
o Explain
why professional ethics is
important and why a code of conduct
should be adopted
o
Learning Outcomes
o
A set of moral principles or values
that govern the actions and
decisions of an individual or group
ETHICS
o
Even if two people agree on the
ethical principles that determine
ethical behaviour, it is unlikely that
they will agree on the relative
importance of each principle
Integrity
o Honesty
o Trustworthiness
and
Promise
Keeping
o Loyalty and Confidentiality
o Fairness and Openness
o
Characteristics & Values re
Ethical Behaviour
Caring for Others
o Respect for Others
o Responsible Citizenship
o Pursuit of Excellence
o Accountability
o
Characteristics & Values re
Ethical Behaviour
Necessary for a society to function
in an orderly manner
o Ethics is the glue that holds a
society together
o Ethical values are incorporated into
laws
o
Ethical Behavior
Conduct that differs from the way
they believe would have been
appropriate
given
the
circumstances
o We decide it ourselves
o
What is unethical behavior?
The person’s ethical standards are
different form those of society as a
whole
o The person chooses to act selfishly
o
Why do people act unethically?
1.
2.
3.
Principles of personal ethics
Professional ethics
Business ethics
Categories of Ethical Principles
Basic justice, fairness
o Respect for the right of others
o Concern for the right of others
o Concern
for the well-being on
welfare of others
o Benevolence,
trustworthiness,
honesty
o Compliance with the law
o
Personal ethics
Integrity, impartiality, objectivity
o Professional competence
o Confidentiality
o Professional behavior
o Avoidance of potential or apparent
conflict of interest
o
Professional ethics
Fair competition
o Global as well as domestic justice
o Social responsibility
o Concern for environment
o
Business ethics
A responsibility to serve the public
o A complex body of knowledge
o Standards
of admission to the
profession
o A need for public confidence
o
Characteristics of Professional Ethics
o
Professionals are required not only to
have an ethical commitment, a personal
resolve to act ethically, but also to have
ethical
awareness
and
ethical
competency. Ethical awareness refers to
the ability to discern between right and
wrong,
while
ethical
competency
pertains to the ability to engage in sound
moral reasoning and consider carefully
the implications of alternative actions
Professional Conduct
Service to others
o Integrity and objectivity
o Professional competence
o Solidarity and teamwork
o Social and civic responsibility
o Global competitiveness
o Equality of all professionals
o
Specific principles of professional conduct
BUSINESS
ETHICS
Chapter 6
Explain what business ethics is
o Discuss the purpose of business
ethics
o Describe the scope and impact of
business ethics on the economy,
society, environment, business
managers
o Explain the ethical challenges in
today’s world
o
Learning Outcomes
Standards
of
moral
conduct,
behaviour and judgment in business
o Involves making the moral and right
decisions while engaging in such
business activities as manufacturing
and selling a product and providing
service to customers
o
Business Ethics
Area of corporate responsibility
where businesses are legally bound
and socially obligated to conduct
business in an ethical manner
o Based
on personal values and
standards of each person engaged in
business
o
Business Ethics
Main purpose
o
To help business and would-be
business to determine what
business practices are right and
what are wrong
Purpose of Business Ethics
3 Special purposes
1. To make businessmen realize that
they
cannot
employ
double
standards to the actions of other
people and to their own actions
Purpose of Business Ethics
3 Special purposes
2. To show businessmen that
common practices which they have
thought to be right because they see
other businessmen doing it, are
really wrong
Purpose of Business Ethics
3 Special purposes
3. To serve as a standard or ideal
upon which business conduct
should be based
Purpose of Business Ethics
All conduct, behaviour and
judgment in business
o Involves making the moral and
right decisions while engaging in
such
business
activities
as
manufacturing and selling a
product and providing service to
customers
o
Scope
Covers acts that may be legal but
which are wrong because they
violate ethical principles
o Achieving
fair
business
competition-achieving
success
solely by offering better products,
services and terms than the
competitor (success is gained by
merits of one’s goods or services
o
Scope
Economic
o Social
o Environmental
o Impact on Business Managers
o
Impact
o
Ethical Challenges in Today’s
World by Ms. Mercedes Suleik
Ethical challenges