Core Principles of

Good Corporate
Governance
Most essential learning competencies:
illustrate how fairness, accountability, transparency
and stewardship is observed in business and
nonprofit organizations
Nonprofit Organization
This organization is formed to
serve a public purpose rather than
for financial gain.
Nonprofit organizations do not
pay income taxes on money it
receives for charitable purposes.
The fund are raised by by asking
for grants and donations.
Corporate Governance
A Good Corporate Governance in all businesses and even in non-
profit organizations such as foundations is very important in order to
build trust and confidence with the investors, donors, and the
community in general.
GOVERNANCE – PAMAMAHALA, PAMUMUNO
The Cadbury Report
In 1992, after a string of corporate failures in the
United Kingdom, a committee was formed and
chaired by Sir Adrian Cadbury to investigate the
British corporate governance system and suggest
improvements to restore the confidence of
investors.
UK Corporate Failures
The Cadbury Report
Ian Robert Maxwell rose from poverty to build an
extensive publishing empire.
After his death in 1991, huge discrepancies in his
companies' finances were revealed, including his
fraudulent misappropriation of the his employees’
pension fund.
The Cadbury Report
At around the same time the Bank of Credit and
Commerce International (BCCI) went bust and lost
billions of dollars for its depositors, shareholders
and employees.
BCCI made phony loans, concealed deposits, hid
huge losses, and was the bank for a host of shady
customers ranging from terrorists and spies to drug
runners and dictators.
Four Sections of The Cadbury Report (Financial Aspects of
Corporate Governance

It outlined corporate governance as the system of

rules, practices, and processes by which businesses
are directed and controlled.

A system of rules, policies and practices that dictate

how a company’s board of directors manage and
oversee the operations of the business.
Corporate Governance (Financial
Aspects of Corporate Governance)
Rules or policies are the guiding principles on specific issues. These
should help the members make better decisions and provide guidance
on how the corporation wants its members to behave.
Good corporate governance determines the integrity of the company.
It is the heart and soul of the company.
It involves managing the interests of all the stakeholders in a
company.
Business Ethics and Corporate
Governance
Corporate governance is absolutely a matter of
“ethics”.
The word ethics evolved form the Greek word
ethos which means “showing moral character”.
 Stakeholders Benefits/Advantages
Owner/Shareholders Fair return on investment.

Management and employees Fair compensation for work and

proper and safe workplace.

Customers Good value products and services.

Suppliers Fair compensation.

Investors and financiers Reliable information and payment

legal and ethical governance.

Government Social responsibility.

Benefits of Good Corporate Governance
Companies with good governance:

Operate more efficiently

Have better ability to attract customers
Better access to external finance
Benefits of Good Corporate Governance
Companies with good governance:
Higher firm valuation and share performance
Mitigate risks and safeguard against mismanagement
Makes companies more accountable and transparent to
investors
Socioeconomic development of the nation
Core Principles of Good Corporate Governance

1.Fairness
- Fairness expresses the just and reasonable treatment of the
stakeholders, free from discrimination and according to the rules and
principles of the corporation.
Fair practices are able to establish longer-term relationships which
are critical to sustain the development of the corporation.
FAIRNESS
Core Principles of Good Corporate Governance

2.Accountability
- Decision-makers should be responsible to take
initiative and to be answerable for their decisions, actions
and behaviors.
Everyone must be able to reason and explain for their
actions.
Accountability
Core Principles of Good Corporate Governance

3. Transparency
- Is the openness and willingness of the company to provide clear
factual and timely information that accurately reflects the financial
situation, performance, ownership and corporate governance of the
company.
Transparency
Common Practices in Business
Organizations
Policies and procedures establish the rules of conduct
within an organization. They are enforced to protect
stakeholders of the corporation.
Employee Conduct
Equal Opportunity
 Basic Employee Rights, Job Discrimination,
Other Labor-related Ethical Issues
Labor Code of the Philippines (Presidential Decree No. 442) – a decree
instituting a labor code thereby revising and consolidating labor and social laws
to afford protection to labor, promote employment and human resource
development, and insure industrial peace based on social justice.
Lays down the rights of workers in relation to wages, rights to self-organization,
collective bargaining, security of tenure, and just and human conditions of work
 Basic Employee Rights, Job Discrimination,
Other Labor-related Ethical Issues
The Anti-Age Discrimination in Employment Act (Republic Act No. 10911)
prohibits discrimination on account of age, and imposes penalties for violation of
the Act.
The Magna Carta for Persons with Disability (Republic Act No. 7277, as
amended) provides that a qualified employee with disability shall be subject to
the same terms and conditions of employment as a qualified able-bodied person.
The Indigenous Peoples’ Rights Act (Republic Act No. 8371) prohibits
discrimination against Indigenous Cultural Communities or Indigenous Peoples
with respect to recruitment and conditions of employment on account of their
descent.
Attendance and Time Off
Adherence to work schedules but
also define how employees may
schedule leaves or notification of
an absence or late arrival.
It also discusses the disciplinary
action employees face for
noncompliance.
Computer Use
Companies may implement
policies governing the use of
computers and internet in the
workplace to limit
unnecessary and time-
wasting internet surfing and
social media usage.
Noncompetition
Some companies require
employees to sign a non-
compete agreement that
limits employee’s activity to
look for the company’s direct
competition and prevent
disclosure of confidential
information.
Finance and Accounting
Accounting policies deal
with how money is handled
in the company and how
acquisitions and liabilities
are recorded.
Business malpractices
What is wrong with this photo?
Pollution and Resource Depletion
Encyclical Laudato Si ( On
Care for our Common Home)
by Pope Francis (2015)
a wake up call to help
humanity understand the
destruction that man is
rendering to the environment
and his fellow man.
Insider Trading
Insider trading in the stock market is characterized as
the buying or selling of shares of stock on the basis of
information known only to the trader, somebody
belonging to the company or to a few persons.
Insider trading is the practice of using information
that has not been made public to execute trading
decisions.