Inside directors- typically officers

Outside directors- may be executives

*Members of a Board of Directors
Agency theory- states that problems
Stewardship theory- long tenure
Affiliated directors- not employed
Retired executive directors- past decisions
Family directors- descendants
*Interlocking Directorates
Direct interlocking directorate- two firms
Indirect interlocking directorate- third firm
Interlocking directorates- gaining
*QUALIFICATIONS OF DIRECTORS
Permanent Disqualification- final judgment
Temporary Disqualification- disclosure requirements
*Organization of the Board
Committees
full power
*Trends in Corporate Governance
Boards evaluating individual directors Smaller boards Splitting the Chairman and CEO positions
Shareholders may begin to nominate board members Society expects boards to balance profitability
with social needs of society
*The Role of Top Management
Top management responsibilities- getting things
*Executive Leadership and Strategic Vision
Executive leadership- directing of activities
Strategic vision- what the company
Transformational leaders- change and movement
Characteristics of effective CEOs include:
1. The CEO articulates a strategic vision for the corporation.
2. The CEO presents a role for others to identify with and to follow.
3. The CEO communicates high performance standards and also show confidence in the followers’
abilities to meet these standards.
*Specific Duties and Responsibilities of a Director
exercise leadership
A director should observe the following norms of conduct:
Conduct fair business transactions
Devote the time and attention
Act judiciously
*I) Board Meetings and Quorum Requirement
Independent directors- should always attend Board meetings
*Remuneration of Directors and Officers- levels of remuneration
Any change/s in accounting policies and practices
 Major judgmental areas
 Significant adjustments resulting from the audit
 Going concern assumptions
 Compliance with accounting standards
 Compliance with tax, legal and regulatory requirements.
The Corporate Secretary- Filipino citizen
*Model of corporate governance
“Good corporate governance is about ‘intellectual honesty’-Mervyn King

3 MODELS OF CORPORATE GOVERNANCE

1.Anglo – US Model- share ownership
2. Japanese Model - 3. German Model
*Composition of the Board of Directors
Insiders(executive directors- employed by the corporation
Outsiders ( non-executive directors or independent director)- no direct relationship

*JAPANESE MODEL- high level

KEIRETSU- set of companies
Lesson 3
Corporate Governance- narrow sense
Ethics- branch of philosophy
Business Ethics- art and discipline
Unethical Issues- a strong corporate governance
Bribery- create a conflict
Coercion- forcing a person
Insider trading -misuse of official position
Conflict of interest- Private interests
Unfair Discrimination- unfair treatment
Political Donations and Gifts- Gifts, donations
*CHARACTERISTICS OF ETHICAL ORGANIZATONS
• Ethical organizations are based on the principle of fairness.
• All stakeholders are treated equally without any Discrimination.
• Benefit of stakeholders in given precedence over own interest.
• There is clear communication in ethical organizations.
• What is to be done, how it is to be done is clearly stated.
*CATEGORIES OF CODE OF ETHICS FOR EMPLOYEES
Category 1 “Be a dependable organization citizen”
Category 2 “Don’t do anything unlawful or improper that will harm the organization”
Category 3 “Be good to customers and suppliers”:
*CAUSES OF UNETHICAL CONDUCT IN AN ORGANIZATION
1. Pressure to meet unrealistic objectives anddeadlines:
2. Increase in acute competition
3. Economic Greed
4. Information of unethical acts through media
5. Pressure to earn profit
6. Lack of Management Support or Poor Leadership
*BENEFITS OF BUSINESS ETHICS
Goodwill of the Business- long term
Prevention from Legal Action- ethical practices
Business ethics have substantially improved society- anti-trust laws
Ethical practices create a strong public image-
Ethics practices support employee growth- good and bad
Strong teamwork and high productivity- Constant check
Build trust with key shareholders- helps organization
High Profits- high returns
Business Ethics & Good Governance- benefits received from the business
*TECHNIQUES TO IMPROVE ETHICAL PRACTICES
At Institutional Level
Ethical code of conduct- “Handbook containing the rules
Ethics committees- influencing
Transparency in working- rules and policies
Penalties- Criminal and monetary
Lesson 4 Business organizations and socio economic development
Socio-Economic Development- calculated with indicators
GDP (Gross Domestic Product)- sum of gross
Life Expectancy- statistical measure
Literacy rate- total percentage
Employment rate- number of people
Lesson 5
Corporate social responsibility- is a gesture
WBCSD (World Business Council for Sustainable Development) “The continuing commitment by
business to behave
Myths surrounding CSR
CSR is not for small businesses
It is too complicated and technical
It is too expensive
It is a market gimmick
It is a separate corporate initiative
Benefits of CSR
Winning new businesses
Enhanced Relationship with stakeholders
Attracting,Retaining and Maintaining a happy workforce
Media interest and good reputation
Access to funding opportunities
Enhancing your influence in the industry
Differentiating yourself from the competitor
Saving money on energy and operating cost
Increase in customer retention

CSR Initiatives
CSR is about corporate citizenship
It is about giving back to the society
It is about business sustainability
It is about thriving in a competitive business environment

CSR Projects for Businesses

Market focused initiative
Product focused initiative
Employee focused initiative
Society focused initiative
Environmental focused initiative

Practical Application of CSR

A good CSR Policy must be result-driven
Business assessment is important

TYPES OF SOCAL RESPONSIILITY

Practical Application of CSR
A good CSR Policy must be result-driven
Business assessment is important
Models of corporate social responsibility
Friedman model(1962-73)- A businessmen should perform his duty well
Ackerman Model(1976) the internal policy goals
Carroll Model(1991) good global
Environmental Integrity & Community Model- developed by redman
Corporate Citizenship Model

Stockholders & Stakeholders Model

New Model of CSR