Question

Discussion Topic: Corporate Governance

Stakeholder theory states that many types of groups depend on the fiduciary duties of the company’s management (i.e. employees, customers, suppliers, shareholders, etc.). You will use concepts learned in this Discussion to address your assignments. Go to the Library, which can be accessed through the home area of the course room, and find an article on Corporate Governance. Include the title, author, and cite any short quote used appropriately making sure to include the reference using APA citation and reference style.

• Discuss in your own words: How is corporate governance defined?

• What are the essential components of corporate governance and how does it affect the workplace environment?

• In your response, discuss how corporate governance shapes the ethical climate of a company. What components of corporate governance have you experienced in your professional career?

• What red flags would be a signal of poor corporate governance?

Answer 1

Solution:-

1. How is corporate governance defined:-

It is the system, processes and procedures by which the companies are governed and run. They require the balancing efforts to support the interest of various stakeholders.

2. What are the essential components of corporate governancea and how does it affect the workplace environment:-

The three pillars of corporate governance are: transparency, accountability, and security. All three are critical in successfully running a company and forming solid professional relationships among its stakeholders which include board directors, managers, employees, and most importantly, shareholders.

Taken together, transparency, accountability, and security define a company’s integrity. Achieving all three isn’t an easy thing to do, but fortunately, companies now have an partner in board portal software that also doubles as corporate governance software. A board portal doesn’t just digitize the whole board meeting process; it also makes the process more transparent by keeping clear and complete documentation at all times. For example, a director who wants to review the details surrounding the decision for a recent merger can pull out the meeting minutes from the archive. An outside auditor authorized to request the same kind of documentation will have access to it, too. In short, information needed by anyone with authorization — whether they’re part of the company or an outsider — can get what they need quickly and easily.

Aside from being readily available, documents and other meeting files are version-controlled and comes with audit trails. This means that when different versions of a file exist, each version carries a record of what changers were made and who made those changes. This feature of board portals address the need for accountability.

As for security, a board portal has to adhere to industry standards to keep files safe whether in transmission or in storage. With features such as access right control, authentication procedures, password requirements, encryption, and auto-purge for lost devices, a board portal turns iPads and Androud tablets the most secure briefcase a director can ever have.

3. In your response, discuss how corporate governance shapes the ethical climate of a company. What components of corporate governance have you experienced in your professional career:-

Corporate governance is meant to run companies ethically in a mannersuch that all stakeholders, creditors, distributors, customers, employees,the society at large and government are dealt in a fair manner. Goodcorporate governance should look at all stakeholders and not justshareholders alone. Otherwise, a chemical company, for example, canmaximize the profit of shareholders but completely violate all

environment laws and make it impossible for the people around the area tolead a normal life. Business ethics has a substantial role to establish andsustain corporate governance in any country including Bangladesh.

If unethical practices go on in business, definitely corporate governancewill be affected. Therefore, they should follow some principles and lawprovisions which are still going on.

For the purpose of establishing good corporate governance some publicorganizations should discharge their responsibilities. Other stakeholderslike government, customers, suppliers, law enforcing authorities, politicalparties, business associations, social leaders can also contribute a lot forthe purpose.

For the establishment and sustaining good corporate governance inbusiness areas, ethics level must be maintained. Unethical business peoplecan do and undo many things and go to any level for their interest only.Unethical business people do not have any sense of social responsibility.Under the circumstance, strong and drastic action against their crime canbe of immense help establish and maintain corporate governance inbusiness areas in. Corporate governance should come from within; it is not something whichregulators have imposed on a management. There is no point in makingstatutory provisions for enforcing ethical conduct. There are a lot ofprovisions in the Companies Act, for example, a) disclosing the interest ofdirectors in contracts in which they are interested; b) abstaining fromexercising voting rights in matters they are interested; and c) statutoryprotection to auditors who are supposed to go into the details of thefinancial management of the company and report the same to theshareholders of the company. But most of these may be observed in letter,but not in spirit. Members of the board and top management should ensurethat these are followed both in letter and spirit. There are a number of greyareas where the law is silent or where regulatory framework is weak. Inthe US, for instance, the courts recognize that new forms of fraud mayarise.