Definitions

Question 1

Codetermination (Germany)

Answer 1

The right of employees to be kept informed of the company’s activities and to participate in decisions that may affect the workers

Question 2

Principles-based approach to corporate governance

Answer 2

“comply or explain mechanism”

Question 3

Corporate governance

Answer 3

The system of rules, practices and processes by which a company is directed and controlled

Question 4

The agency problem

Answer 4

There is a “principle”, who has ownership of an entity, and an “agent”, who has control of corporate decisions

The agency problem is that agents may act for their own personal benefits rather than considering what is best for the shareholder’s profitability

Question 5

“The race to the bottom”

Answer 5

Government deregulation of the business environment, or reduction in tax rates, in order to attract or retain economic activity in their jurisdictions

Question 6

Utilitarian ethics

Answer 6

A system of ethics according to which the rightness or the wrongness of an action should be judged by its consequences

i.e. something is moral when it produces the greatest amount of good for the greatest amount of people

Question 7

Deontological ethics

Answer 7

An approach to ethics that focuses on the rightness or wrongness of the actions themselves, rather than the consequences of the actions