Unit I-Business Ethics-04-Corporate Governance

Who is responsible for the governance of a company?

Boards of directors are responsible for the governance of their companies.

Define business ethics.

Business ethics refers to the moral principles and values that guide the behavior and decision-making of individuals and organizations in the business world. It involves considering the impact of business actions on various stakeholders and making ethical choices.

What role does corporate governance play in improving organizational efficiency?

Corporate governance enhances corporate performance, economic results, and lays the foundation for company behavior, resource utilization, and overall strategies.

Why is corporate governance needed for risk mitigation and compliance?

Corporate governance ensures compliance with statutory laws and guidelines, and helps in implementing risk mitigation mechanisms.

What areas does corporate governance involve?

Corporate governance involves environmental awareness, ethical behavior, corporate strategy, compensation, and risk management.

What is corporate governance?

Corporate governance is the system by which companies are directed and controlled, involving the collective control of shareholders, the board of directors, and management.

What is the purpose corporate governance?

Corporate governance is the system of rules, practices, and processes by which a company is directed and controlled. It aims to ensure transparency, accountability, and fairness in the company's relationships with its stakeholders.

Define corporate governance.

Corporate governance is the system of rules, practices, and processes by which a firm is directed and controlled, involving the balancing of interests among stakeholders such as shareholders, management, customers, suppliers, financiers, the government, and the community.

Describe the role of corporate governance during mergers and acquisitions.

Corporate governance plays a crucial role during mergers and acquisitions, helping to differentiate between good and bad deals and improving the quality of corporate governance in the organization.

How does corporate governance enhance shareholder value?

Corporate governance protects valuations of a company and maximizes the interests of all stakeholders, thus enhancing shareholder satisfaction.

List three stakeholders mentioned in the content and their respective stakes.

Customers (Stake: Product/service quality and value), Employees (Stake: Employment income and safety), Investors (Stake: Financial returns).

Describe governance.

Governance is the way in which organizations or countries are managed at the highest level, including the systems for exercising management and control.

Explain the Japanese Model of corporate governance.

In the Japanese Model, significant capital is raised through banking and financial institutions. The Board of Directors and the President are appointed by both shareholders and main banks, recognizing the interests of lenders.

Define the Stewardship Theory in corporate governance.

In the Stewardship Theory, managers act as guardians of the business, its investors, and shareholders. They work together with the Board of Directors to maximize profits and believe that when profits are maximized, the management also benefits.

Describe the importance of intellectual property rights.

Intellectual property rights, such as copyright, are crucial for protecting the creations and innovations of individuals and organizations. They provide exclusive rights to the creators, encouraging innovation, creativity, and economic growth while preventing unauthorized use or copying of their work.

How does good corporate governance impact mergers and acquisitions?

Mergers and acquisitions by companies with good corporate governance are better received by stakeholders in the market. Good corporate governance also helps differentiate between good and bad deals.

Describe how mergers and acquisitions can improve the quality of corporate governance.

Mergers and acquisitions have the power to improve the quality of corporate governance in an organization. For example, Tata Sons acquiring JLR and Tetley can enhance their corporate governance.

What is the role of shareholders in corporate governance?

Shareholders appoint directors and auditors and ensure that an appropriate governance structure is in place.

What does stakeholder theory suggest a business must do?

Stakeholder theory suggests that a business must seek to maximize value for its stakeholders.

Describe the role of stakeholders in corporate governance.

Stakeholders in corporate governance have rights established by law or mutual agreements and actively cooperate with corporations in creating wealth, jobs, and sustainable enterprises.

What are the six key areas of corporate governance covered by the principles?

The six key areas are: ensuring the basis for an effective corporate governance framework, the rights of shareholders, the equitable treatment of shareholders, the role of stakeholders in corporate governance, disclosure and transparency, and the responsibilities of the board.

Describe the stakeholder theory of corporate governance.

The stakeholder theory of corporate governance focuses on the effect of corporate activity on all stakeholders of the corporation, rather than just the shareholders.

What are the three types of companies in India based on shareholding pattern?

The three types of companies in India are private companies, public companies, and public sector undertakings, each with a distinct shareholding pattern.

Explain the shareholder/stockholder theory of corporate governance.

Under the shareholder/stockholder theory, management's primary responsibility is to deliver maximum returns to shareholders through dividends or increased share price.

Explain the Agency Theory in corporate governance.

According to the Agency Theory, managers act as agents of the organization, executing business operations on behalf of the owners. However, there is a downside as agents may prioritize personal interests over the business' interests.

Give an example of a company's response during tough situations that upholds its image.

Tata group's response during the 9/11 attack is an example of a company upholding its image during tough situations.

How does the Anglo-American Model of corporate governance differ from other models?

The Anglo-American Model emphasizes shareholder rights, has professional managers with minimal ownership stake, and encourages portfolio investors to sell shares if unsatisfied with company performance.

Define the Anglo-American Model of corporate governance.

The Anglo-American Model is a shareholder-oriented approach to corporate governance where shareholders have the right to elect all board members and direct the management of the company.

Describe the German Model of corporate governance.

The German Model, also known as the European Model, emphasizes the participation of workers in the management of the company through a two-tier board system consisting of a Supervisory Board and a Management Board.

What is the role of the Supervisory Board in the German Model?

The Supervisory Board in the German Model is elected by the shareholders and includes representatives elected by the employees. It appoints and monitors the Management Board.

What are the basic principles of corporate governance?

The basic principles of corporate governance are accountability, transparency, fairness, and responsibility.

What is the responsibility of the board in corporate governance?

The board is responsible for providing strategic guidance to the company, effectively monitoring management, and being accountable to the company and shareholders.

Describe the role of a company's board of directors in corporate governance.

The board of directors is the primary force influencing corporate governance.

Describe the disclosure and transparency requirements in corporate governance.

The corporate governance framework should ensure timely and accurate disclosure of all material matters regarding the corporation, including financial situation, performance, ownership, and governance of the company.

How does the corporate governance model in India differ from other countries?

The corporate governance model in India is a mix of the Anglo-American and German Models, taking into account the characteristics of both systems.