Corporate Governance and Ethics

Definitions

Corporate governance can be defined as the system by which a company is controlled and directed. It is basically the management of the company.

Ethics refers to refers to the recognition and promotion of generally accepted patterns of right and wrong behaviour.

Recent Corporate History

One does not have to search very far to find examples of corporate mismanagement, either unintentional or intentional (i.e. fraudulent). In fact the last few decades have produced some spectacular examples; Enron, Worldcom and Lehman Brothers to name but a few, albeit perhaps the largest and most significant. The far reaching financial consequences of these cases have been felt across the globe.

In response regulators have attempted to improve standards of corporate governance and have tried to reduce fraudulent behaviour. Methods of achieving and enforcing this vary around the globe. Perhaps the most famous include the US Sarbanes Oxley Act (regulatory), the UK Corporate Governance Code (principles-based) and the IFAC Code of Ethics and Conduct (principles-based).

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Tags:	separation of ownership and control