PRINCIPLES OF CORPORATE GOVERNANCE

What is corporate governance?

➢ Corporate governance is distinct from the day-to-day operations management tasks

carried out by a company's executives. It is a direction and control system that rules and
oversees a corporation by a board of directors.
➢ Corporate governance is balancing the interests of a company's various stakeholders,
including shareholders, top management executives, consumers, suppliers, financiers,
the government, and the general public.
➢ Corporate governance involves nearly every aspect of management, from action plans
and internal controls to performance assessment and corporate transparency, because it
offers the foundation for achieving a company's objectives.

Importance of corporate governance

➢ Corporate governance is crucial because it establishes a set of rules and policies that
regulate how a company runs and how all of its stakeholders' interests are aligned.
Corporate governance leads to ethical business practices, and ethical business practices
lead to financial viability.

7 Key Principles of Corporate Governance

1. Transparency
- “All actions implemented and their decision support will be available for inspection
by authorized organization and provider parties.”
- The ease with which an outsider may make a meaningful examination of a
company's behavior, economic fundamentals, and non-financial issues relevant
to that enterprise is known as transparency. This is a metric for how well
management communicates important information in a truthful, accurate, and
timely way — not only audit data, but also general reports and press releases. It
indicates whether or not investors get a complete picture of what is going on
inside the firm.
2. Accountability
- “Identifiable groups within the organization - e.g., governance boards who take
actions or make decisions - are authorized and accountable for their actions.”
- Individuals or groups within a firm that make decisions and take actions on
specific issues must be held accountable for their choices. Accountability
requires mechanisms that are both present and effective. These allow investors
to question and evaluate the acts of the board of directors and its committees.
3. Fairness
- “All decisions taken, processes used, and their implementation will not be allowed
to create unfair advantage to any one particular party.”
 - The internal processes of the firm must be balanced to account for all persons
who have an interest in the company's development. Diverse groups' rights must
be recognized and respected. Minority shareowner interests, for example, must
be given the same weight as those of the majority share owner (s).
4. Responsibility
- “Each contracted party is required to act responsibly to the organization and its
stakeholders.”
- In the context of management, accountability refers to actions that allow for
remedial action and the punishment of poor management. When required,
responsible management would put in place the essential measures to get the
firm back on track. While the board is responsible to the corporation, it must also
be responsive to and responsible to all of the company's stakeholders.
5. Discipline
- “All involved parties will have a commitment to adhere to procedures, processes,
and authority structures established by the organization.”
- The commitment of a company's top management to follow behavior that is
generally recognized and acknowledged as correct and suitable is known as
corporate discipline. This refers to a company's understanding of and dedication
to the fundamental principles of good governance, especially at the executive
level.
6. Social Responsibility
- A well-managed corporation will be aware of and respond to societal challenges,
with ethical standards as a top priority. In terms of environmental and human
rights problems, a good corporate citizen is increasingly recognized as one who
is non-discriminatory, non-exploitative, and accountable. Taking such aspects
into account is likely to result in indirect economic advantages such as increased
productivity and the corporate reputation of a firm.
7. Independence
- “All processes, decision-making, and mechanisms used will be established so as to
minimize or avoid potential conflicts of interest.”
- The degree to which systems have been put in place to reduce or eliminate
potential conflicts of interest, such as control by a strong chief executive or a
major shareowner, is referred to as independence. These methods include the
board's membership, appointments to board committees, and external parties
such as the auditors. Internal procedures and choices should be objective and
free of unwarranted influences.

Consequences of Poor Corporate Governance

➢ One of the most important goals of corporate governance is to establish a system of

rules, regulations, and procedures for a corporation, or to hold people accountable. Each
main component of the "government" - the shareholders, the board of directors, the
senior management team, and the company's workers – is held accountable by the
 others. The fact that the board of directors provides financial information to
shareholders on a regular basis, which embodies the corporate governance concept of
openness, is part of this accountability.

Example: ENRON AND WORLDCOM

➔ Enron's dilemma was that its board of directors disregarded several conflict-of-interest
laws by enabling Andrew Fastow, the company's chief financial officer (CFO), to form
separate, private partnerships to do business with the company. In reality, these private
partnerships were utilized to conceal Enron's debts and obligations, which would have
drastically decreased the company's revenues.
➔ What happened at Enron was plainly the result of a lack of corporate governance, which
should have prohibited the formation of these shell companies to hide the losses. The
organization also had a corporate culture that included dishonest personnel from the top
(Fastow) all the way down to traders who conducted unlawful market moves.
➔ Following the Enron and Worldcom scandals, the Sarbanes-Oxley Act was passed in
2002, imposing more strict recordkeeping standards on businesses as well as hefty
criminal penalties for breaking them and other securities laws. The goal was to
re-establish public trust in public corporations and their operations.

Key Takeaways

● Corporate governance is the structure of rules, practices, and processes used to direct
and manage a company.
● A company's board of directors is the primary force influencing corporate governance.
● Bad corporate governance can cast doubt on a company's operations and its ultimate
profitability.
● Corporate governance entails the areas of environmental awareness, ethical behavior,
corporate strategy, compensation, and risk management.
● The basic principles of corporate governance are accountability, transparency, fairness,
and responsibility but in the Philippines, there are only three principles being applied -
fairness, accountability, and transparency.
CORE TEACHINGS AND BELIEFS OF THE DIFFERENT CLASSIFICATIONS OF RELIGIONS

A. Buddhism
➢ Teachings - Dharma
○ Wisdom, kindness, patience, generosity, and compassion were among the
values he emphasized. Killing living beings, taking what is not given,
sexual misbehavior, lying, and using drugs or alcohol are all prohibited by
Buddhist moral precepts.
■ FOUR NOBLE TRUTHS
● The truth of suffering (dukkha)

● The truth of the cause of suffering (samudaya)

● The truth of the end of suffering (nirhodha)

● The truth of the path that frees us from suffering (magga)

■ EIGHTFOLD PATH
● Right understanding (Samma ditthi)

● Right thought (Samma sankappa)

● Right speech (Samma vaca)

● Right action (Samma kammanta)

● Right livelihood (Samma ajiva)

● Right effort (Samma vayama)

● Right mindfulness (Samma sati)

● Right concentration (Samma samadhi)

➢ Beliefs
○ Followers of Buddhism don’t acknowledge a supreme god or deity.
Instead, focus on achieving enlightenment—a state of inner peace and
wisdom. When followers reach this spiritual echelon, they’re said to have
experienced nirvana.

○ The religion’s founder, Buddha, is considered an extraordinary being, but

not a god. The word Buddha means “enlightened.”

○ The path to enlightenment is attained by utilizing morality, meditation and

wisdom. Buddhists often meditate because they believe it helps awaken
the truth.

○ There are many philosophies and interpretations within Buddhism,

making it a tolerant and evolving religion.
 ○ Some scholars don’t recognize Buddhism as an organized religion, but
rather, as a “way of life” or a “spiritual tradition.”

○ Buddhism encourages its people to avoid self-indulgence but also

self-denial.

○ Buddha’s most important teachings, known as The Four Noble Truths, are
essential to understanding religion.

○ Buddhists embrace the concepts of karma (the law of cause and effect)
and reincarnation (the continuous cycle of rebirth).

○ Followers of Buddhism can worship in temples or in their own homes.

○ Buddhist monks, or bhikkhus, follow a strict code of conduct, which

includes celibacy.

○ There is no single Buddhist symbol, but a number of images have evolved

that represent Buddhist beliefs, including the lotus flower, the
eight-spoked dharma wheel, the Bodhi tree, and the swastika (an ancient
symbol whose name means "well-being" or "good fortune" in Sanskrit).
B. Islam
➢ Teachings
○ According to Islam, the angel Gabriel conveyed Allah's message to the
prophet Muhammad.
➢ Beliefs
○ Muslims believe that Allah sent various prophets to preach His Torah.
Abraham, Moses, Noah, and Jesus are among the prophets revered by
both Jews and Christians. Muslims believe Muhammad to be the final
prophet.
C. Hinduism
➢ Teachings
○ In addition to Brahman, who is thought to be the absolute God power
present in all things, Hindus worship a plethora of gods and goddesses.
The Mandir is where Hindu devotion, known as "puja," is usually
performed (temple). Hindu devotees are welcome to visit the Mandir at
any time. Hindus can worship at home, and many have devoted shrines to
certain gods and goddesses. Giving offerings is a significant aspect of
Hindu devotion. Giving gifts to a deity or goddess, such as flowers or
perfumes, is a frequent ritual. In addition, many Hindus go to India to see
temples and other religious locations.
➢ Beliefs
○ Hindus follow the samsara (continuous cycle of life, death, and rebirth)
and karma teachings (the universal law of cause and effect). "Atman," or
 the concept of a soul, is one of Hinduism's central ideas. According to this
belief, all living things have a soul and are a part of the supreme soul.
D. Christianity
➢ Teachings
○ Love God.
○ Love your neighbor as yourself.
○ Forgive others who have wronged you.
○ Love your enemies.
○ Ask God for the forgiveness of your sins.
○ Jesus is the Messiah and was given the authority to forgive others.
○ Repentance of sins is essential.
➢ Beliefs
○ Christians believe in a single God. Since the beginning of time, God has
existed. All things were created by Him and are sustained by Him. God is
almighty (all-powerful), omniscient (all-knowing), and omnipresent
(everywhere at the same time) (all present). God is holy, flawless, and
good. We think that the Bible is the principal means by which God has
revealed himself to humanity. God communicated personally to and
through the people who authored and preserved the writings that we now
have in the Bible. The Bible is the major source of information about God
and His personality.
Key Questions: How do the teachings and beliefs of these religions influence…

A. The values system?

● Religion is one of the most powerful belief systems ever devised. These ideas, in
turn, impact our behavior and dictate our behaviors, which in turn create
attitudes, cultural norms, and individual and collective behavior.
B. The conduct of business?
● Religious teachings not only give a plan for life but also assist believers in
navigating employment challenges. Religious ethics that include the social
consequences of commercial activity have a broader scope than many current
intellectual frameworks. This helps to alleviate issues associated with the notion
of business as a valueless organization. Understanding faith is crucial when it
comes to managing diversity in the workplace.
C. Corporate governance?
● Religion has the power to shape the culture of a whole community, nation, or
global area. This affects much more than a person's personal habits, such as
how the government is governed and what creative and scientific breakthroughs
are accomplished. Such as when we entertain our personal interests rather than
doing what is right and what would benefit society.

References:
https://corporatefinanceinstitute.com/resources/knowledge/other/corporate-governance/
https://www.investopedia.com/terms/c/corporategovernance.asp
https://www.swview.org/blog/seven-characteristics-corporate-governance
https://www.history.com/topics/religion/buddhism
https://www.awakenslc.com/post/5-basic-beliefs-of-christianity
https://www.history.com/topics/religion/history-of-christianity
https://www.history.com/topics/religion/islam
https://www.history.com/topics/religion/hinduism
https://www.history.com/topics/religion/hinduism#:~:text=Hindus%20believe%20in%20the%20
doctrines,part%20of%20the%20supreme%20soul.