1 / 12

Governance and Ethics

Governance and Ethics. Corporate Governance. The separation of ownership and control creates an agency problem in modern corporations What does this mean? This has given rise to a host of governance mechanisms Some ideas Regulation SEC, NYSE, GAAP, Sarbanes Oxley Fear of takeover

michon
Download Presentation

Governance and Ethics

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Governance and Ethics

  2. Corporate Governance • The separation of ownership and control creates an agency problem in modern corporations • What does this mean? • This has given rise to a host of governance mechanisms • Some ideas • Regulation • SEC, NYSE, GAAP, Sarbanes Oxley • Fear of takeover • Large bloc holdings • Is the answer more wealthy people?

  3. Governance Mechanisms • Boards • Separation of CEO and Chairman • Independent vs Executive Directors • Role of audit and compensation committees • The average US CEO earns 400-500 times the salary of an average production worker • The figure was 107x in 1990 and 42x in 1982 • Is the system working?

  4. Governance Mechanisms • Incentives • Stock options • Indexed stock options • Bonuses • ESOPs • Promotion systems • Tournament model • Tenure • CEO compensation • Balanced Scorecard

  5. Balanced Scorecard

  6. Stakeholders

  7. Shareholders vs Stakeholders • Milton Friedman • the business of business is business • anything within the law is legitimate • Society can always change laws if they disapprove of behavior • What if business controls the lawmakers? • Instrumentalism • Pursuit of profit in line with societal expectations • Corporate Responsibility

  8. Ethics • Utilitarianism • On li’l orphans • Tyranny of the majority • Rights Model • Which bill of rights? • Justice Model (Rawls) • Liberty, opportunity, income, wealth, and self-respect - are to be distributed equally unless an unequal distribution of any or all of these goods is to the advantage of the least favored. • The concept of the veil of ignorance

  9. Ethics and Strategy • Ethical decision • One that typical stakeholders would find acceptable because it aids stakeholders, the organization, or society • Unethical decision • One that a manager would prefer to disguise or hide because it enables a company or individual to gain at the expense of society or other stakeholders

  10. Thinking Through Ethical Problems • Does my decision fall within the accepted values or standards that typically apply in the organizational environment? • Am I willing to see the decision communicated publicly to all stakeholders affected by it? • Would the people with whom I have a significant personal relationship approve of the decision?

  11. Approaches to Change Approaches to correcting poor performance.

  12. Exercises • Stakeholder Claims • Al Dunlap

More Related