Handout 3.1

Question 1

is the system by which companies are
directed and controlled.

Answer 1

Corporate Governance

Question 2

refers to structures and processes for the direction and control of companies.

Answer 2

Corporate Governance

Question 3

The Code aims to promote corporate governance reforms that will raise investor confidence, develop the
capital market, and help achieve high sustained growth for the corporate sector and the economy.

Answer 3

Memorandum Circular 2, Series of 2002

Code of Corporate Governance, under resolution no. 135, April 4, 2002

Question 4

defines the relationship between the principals

Answer 4

Agency Theory

Question 5

states that a steward protects and maximizes shareholders’ wealth through firm
performance.

Answer 5

Stewardship Theory

Question 6

incorporated the accountability of management to a broad range of stakeholders. It
states that managers in organizations have a network of relationships to serve

Answer 6

Stakeholder Theory

Question 7

are individual beliefs about desirable behaviors and goals that are stable over
time.

Answer 7

Personal values

Question 8

are about the behaviors and things that we deem necessary in life; ensuring wellbeing collectively and individually

Answer 8

Values

Question 9

is a person’s ability to adhere to a consistent set of moral principles or values

Answer 9

Integrity

Question 10

exposure to different environments

Answer 10

Background and Experience

Question 11

the extent to which a person believes they have control over the events in their
life.

Answer 11

Locus of Control

Question 12

Two types of Locus of Control

Answer 12

Internal = blame yourself
External = blame external reasons/others

Question 13

the creativity with which one can reflect on an ethical dilemma.

Answer 13

Moral Imagination

Question 14

The systems of reward and punishment within the organization.

Answer 14

Incentives

Question 15

The exercise of hierarchical power to compel a subordinate to act in a certain way

Answer 15

Authority

Question 16

Direct or indirect influence of others on one’s behavior (due to pressure or mere exposure)

Answer 16

Peer effects

Question 17

Repeated patterns of behavior or interactions. Often mechanically performed activities or procedures.

Answer 17

Routines

Question 18

Functional and hierarchical

Answer 18

Work roles

Question 19

Suppresses morality by freeing the individual from moral reflection and decisionmaking.

Answer 19

Bureaucracy

Question 20

Within the corporate governance framework
occurs when an officer or other controlling member of a corporation has other financial interests that
directly conflict with the corporation’s objectives.

Answer 20

Conflicts of Interest

Question 21

Within the corporate governance framework
occurs when an officer or other controlling member of a corporation has other financial interests that
directly conflict with the corporation’s objectives.

Answer 21

Conflicts of Interest

Question 22

is a broad term that encompasses the executive staff reporting to the board and the board’s awareness of the company’s daily operations and how its objectives are
achieved.

Answer 22

Oversight Issue

Question 23

is necessary for effective corporate governance. Without it, one corporation’s division might endanger the entire company’s success or cause stockholders to lose the desire to continue their investment.

Answer 23

Accountability Issues

Question 24

a corporation must accurately report its profits and losses and make those figures
available to those who invest in the company.

Answer 24

Transparency