Ethics, corporate governance and social responsibility Flashcards
How can a government influence the economy?
Macroeconomics
Legal and market regulations
corporate governance and social responsibility
Define: Fiscal Policy.
Government policy on taxation and government spending
What are the differences between direct and indirect taxes?
Direct - Income and corporate tax
Indirect - VAT , duty fuel and council tax
Define: Monetary policy
government policy on money supply, the monetary system, interest rates and the availability of credit.
What happens if interest rises?
Spending falls Investment falls Foreign interest Exchange rate increases Inflation rate falls
Define: CPA
Corporate political activities.
The involvement of companies in the political process with the aim of influencing policies towards their preferences
What are the types of CPS?
Buffering - Warning the government about the impact
Bridging - being aware of new legislations
What are the institutes involved in the global trade and growth?
WTO The G8 (Russia, GB, USA, Japan, Canada, Italy, France, Germany) IMF World Bank EBRD
What are the different market regulations?
The Competition Act 1998 Industry regulators The competition and market authority The restrictive practices court European union competition court Self regulation
Define: Corporate governance
The system in which companies and other entities are directed and controlled
What are the types of stakeholders?
Internal - Employees and management
Connected - Shareholders, customers, suppliers, financiers
External - Community, government, trade unions, pressure groups
Design the Mendelow diagram
Power/Influence
Level of interest
What are the failures of corporate governance?
Domination by a single individual Lack of involvement of board Lack of adequate control function Lack of supervision Lack of independent scrutiny Lack of contact with shareholders Emphasis on short term liability Misleading accounts and information
Benefits of corporate governance?
Risk reduction
Performance
External support
Define UK Corporate Governance Code
Government led Governance code mainly for the FTSE350. Companies must comply or explain any departures from it in the financial statements
What is the UK Corporate Governance Code Framework? LEARR
Leadership (chairman, chief executive, EDs and NEDs)
Effectiveness (board should have a wide range of skills)
Accountability (present a balanced assessment)
Remuneration (balance of directors and NEDs)
Relations with shareholders - AGM meetings
Factors to determine if something is ethically wrong?
Values - rights and obligations from society
Principles - eg. CIMAs ethical principles
Motivation - why a person acted as they did
Consequences - does the outcome justify how it was carried out.
What are the range of approaches when making ethical decisions? UPACE
Egoists - looks after their own needs
Pluralists - Considers if stakeholders are impacted
Absolutists - is it fundamentally correct? Legal?
Consequentialists - focuses of the consequences
Utilitarians - maximising the benefit to society
What are CIMAs fundamental principles?
Integrity - Not to be party to anything misleading
Objectivity - avoiding all forms of bias, prejudice and partiality
Professional competence and due care- remain up to date
Professional behavior - protect CIMAs reputation
What are Caroll and Buchholtz’s layers of CSR?
Economic responsibilities - Make sure the company is making a return for shareholders
Legal responsibilities - To obey the law
Ethical responsibilities - Must a ethically
Philanthropic responsibilities - Donations
