ETHICS OF

CORPORATE
GOVERNANCE
PRESENTED BY:
SAMRA NAVEED
F2017045025
M.COM
 CONTENTS

 Corporate governance

 Ethics

 Importance of ethics in CG

 Role of ethics in CG

 Ethical aspect of CG

 Ethics theories and CG

 CORPORATE
GOVERNANCE

 The systems of rules , practices and processes by which a

company is directed and controlled.
 Corporate governance essentially involves balancing the interest of
a company’s many stakeholders such as shareholders, management,
customers, suppliers, financiers, government and the community.
 Corporate governance represents the value framework, ethical
framework and moral framework under which decision are taken.
 ETHICS

 The term ethics has its origin from the Greek word Ethos which
means character or custom.
 Ethics are the rules or code of behavior that individuals and
organization apply in their decision making actions.
 There are three types of ethics.
1. personal ethics.
2. Corporate ethics.
3. Professional ethics.
 IMPORTANCE OF ETHICS
IN CG

Ethics has a great importance in corporate governance.

 Ethics is all about developing trust.
 It would promote and encourage for transparency and
accountability in functions of any government authority.
 It provide courage, dedication, determination and commitment to
do work effectively and efficiently.
 It provide public welfare and not personal gain
ROLE OF ETHICS IN CG

The three main themes that emerged in respect of the main role of
ethics in corporate governance.

1. Corporate governance is a CODE OF ETHICS.

2. Corporate governance is INCLUSIVE OF ETHICS.

3. Ethics is an AFFILIATE of corporate governance.

 ETHICAL ASPECT OF CG
The board sets the ‘tone from the top’ of the organization principally through five means
and all these elements need to be in place in order for a boards commitment to ethics to be
put fully into practice;

 Behaviors – examples and leadership.

 Board structure and processes – appropriate committees, terms of references and

documentation , board.

 Purpose, strategy and vision – what the business will achieve and how.

 values and standards – the way in which business will be done.

 Procedures and control for oversight – appropriate policies, monitoring and reporting
 ETHICS THEORIES AND
CG

The fundamental corporate governance theories of agency theory, stewardship

theory , stakeholder theory , and political theory, there are other ethical theories that
can be closely associated to corporate governance.
These include:
 Business ethics theory
 Feminist ethics theory
 Discourse ethics theory
 Virtue ethics theory
 Postmodern ethics theory
Business Ethics theory:
Study of business activities , decisions and situation where the right and wrong are
addressed.
Feminist ethics theory:
Emphasizes on empathy, healthy social relationship, loving care for each other and
avoidance of harm.
Discourse ethics theory:
Concerned with peaceful settlement of conflicts.
Virtue ethics theory:
Focuses on moral excellence , goodness, chastity and good character. Virtue ethics
involve two aspects.
Affective
Intellectual
Postmodern ethics theory:
Theory goes beyond the facial values of morality and gut feelings.
 WHY GOOD CG IS A
QUESTION OF ETHICS

It focuses on what our relationships are and ought to be with our

employees, our creditors ,our customers, our suppliers, our
distributors, our neighbors and other members of community in
which we operate.