The Essential Component of Corporate Governance

9760 Words Aug 11th, 2010 40 Pages
Center for International Private Enterprise

ECONOMICREFORM
Feature Service®
January 12, 2006

Business Ethics: The Essential Component of Corporate Governance
John D. Sullivan, Ph.D.
Executive Director, CIPE

Aleksandr Shkolnikov,
Program Officer, Global, CIPE

Given ´¼ünancial scandals and the resulting new mandates on business, ´¼ürms ´¼ünd themselves pressed to develop strong codes of ethics to guide the behavior of board members, managers, and employees. Although the concern with ethics has always been a part of doing business, business leaders today are beginning to think about ethics as a set of principles and guides of behavior rather than a set of rigid rules. In this sense, business ethics is not only an attempt to set a standard
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2. The Rights of Shareholders and Key Ownership Functions: The corporate governance framework should protect and facilitate the exercise of shareholdersÔÇÖ rights. 3. The Equitable Treatment of Shareholders: The corporate governance framework should ensure the equitable treatment of all shareholders, including minority and foreign shareholders. All shareholders should have the opportunity to obtain e´¼Çective redress for violation of their rights. 4. The Role of Stakeholders in Corporate Governance: The corporate governance framework should recognise the rights of stakeholders established by law or through mutual agreements and encourage active co-operation between corporations and stakeholders in creating wealth, jobs, and the sustainability of ´¼ünancially sound enterprises. 5. Disclosure and Transparency: The corporate governance framework should ensure that timely and accurate disclosure is made on all material matters regarding the corporation, including the ´¼ünancial situation, performance, ownership, and governance of the company. 6. The Responsibilities of the Board: The corporate governance framework should ensure the strategic guidance of the company, the e´¼Çective monitoring of management by the board, and the boardÔÇÖs accountability to the company and…

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