Handout 3.1 Flashcards
is the system by which companies are
directed and controlled.
Corporate Governance
refers to structures and processes for the direction and control of companies.
Corporate Governance
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.
Memorandum Circular 2, Series of 2002
Code of Corporate Governance, under resolution no. 135, April 4, 2002
defines the relationship between the principals
Agency Theory
states that a steward protects and maximizes shareholders’ wealth through firm
performance.
Stewardship Theory
incorporated the accountability of management to a broad range of stakeholders. It
states that managers in organizations have a network of relationships to serve
Stakeholder Theory
are individual beliefs about desirable behaviors and goals that are stable over
time.
Personal values
are about the behaviors and things that we deem necessary in life; ensuring wellbeing collectively and individually
Values
is a person’s ability to adhere to a consistent set of moral principles or values
Integrity
exposure to different environments
Background and Experience
the extent to which a person believes they have control over the events in their
life.
Locus of Control
Two types of Locus of Control
Internal = blame yourself
External = blame external reasons/others
the creativity with which one can reflect on an ethical dilemma.
Moral Imagination
The systems of reward and punishment within the organization.
Incentives
The exercise of hierarchical power to compel a subordinate to act in a certain way
Authority
Direct or indirect influence of others on one’s behavior (due to pressure or mere exposure)
Peer effects
Repeated patterns of behavior or interactions. Often mechanically performed activities or procedures.
Routines
Functional and hierarchical
Work roles
Suppresses morality by freeing the individual from moral reflection and decisionmaking.
Bureaucracy
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.
Conflicts of Interest
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.
Conflicts of Interest
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.
Oversight Issue
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.
Accountability Issues
a corporation must accurately report its profits and losses and make those figures
available to those who invest in the company.
Transparency
