Business Ethics

Business ethics (also known as corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and business organizations as a whole. Business ethics can be both a normative and a descriptive discipline. As a corporate practice and a career specialization, the field is primarily normative. In academia descriptive approaches are also taken. The range and quantity of business ethical issues reflects the degree to which business is perceived to be at odds with non-economic social values.

Recent Developments in Corporate Governance

The Department of Company Affairs, in May 2000, invited a group of leading industrialists, professionals and academics to study and recommend measures to enhance corporate excellence in India.   The Study Group in turn set up a Task Force, which examined the subject of Corporate Excellence through sound corporate governance and submitted its report in Nov. 2000.   The task force in its recommendations identified two classifications namely essential and desirable with the former to be introduced immediately by legislation and the latter to be left to the discretion of companies and their shareholders.   Some of the recommendations of the task force include:

  • Greater role and influence for nonexecutive independent directors
  • Stringent punishment for executive directors for failing to comply with listing and other requirements
  • Limitation on the nature and number of directorship of managing and whole-time directors
  • Proper disclosure to the shareholders and investing community
  • Interested shareholders to abstain from voting on specified matters
  • More meaningful and transparent accounting and reporting
  • Tougher listing and compliance regimen through a centralized national listing authority
  • Highest and toughest standards of Corporate Governance for listed companies
  • A code of public behaviour for public sector units
  • Setting up of a centre for Corporate Excellence

Recently, the Government has announced the proposal for setting up the Centre for Corporate Excellence under the aegis of the Department of Company Affairs as an independent and autonomous body as recommended by the study group.  … Read the rest

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Important Recommendations for Ensuring Good Corporate Governance

Historically attention was paid to the subject following the collapse of Savings and Loan companies in USA in the mid 1980’s and the SEC of USA taking a tough stand on the same.   It is ironical that once again it was the US which brought in Sarbanes Oxley Act and along with it very stringent measures of Corporate Governance.   In passing, we may add that there is no corresponding legislation in India. Later, Adrian Cadbury report was an important milestone, which spelt out 19 best practices called the “Code of Best Practices”, which the companies listed on the London Stock Exchange, began to comply with.… Read the rest

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Case Study on Corporate Governance: WorldCom Scandal

Established in 1988, WorldCom was formed so that the strongest, most capable public relations firms could serve national and international clients, while retaining flexibility and client- service focus inherent in independent agencies. Through WorldCom, clients have on demand access to in-depth communication expertise from professionals who understand the language, culture and customs in the geographic areas of operation. WorldCom has 105 offices in 90 cities and 40 countries on five continents, more than 2000 employees and recorded revenue of US $ 243.5 million in 2008.

In the 90’s WorldCom was involved in acquisitions and purchased over 60 firms. The complete financial integration of the acquired company must be accomplished, including an accounting of assets, debts, and a host of other financially important factors.… Read the rest

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Case Study on Corporate Governance: Enron Scam

Enron is an energy-based company in Houston, Texas that deals with the energy trade on international and domestic based. Enron Corp. Is one of the world’s largest energy, commodities and Services Company was created out of merger of two major gas pipe line in 1985.

Enron was created by merge between Houston Natural Gas and Internorth. Houston’s gas’s CEO Kenneth lay headed the merger of the two companies. After that Kenneth lay become the CEO of Enron. Earlier Enron was Enron was solely involved with the distribution and transmission of electricity and gas of United States.

In merger, Enron incurred a large amount of debt, and which resulted deregulation, after this Enron was no longer had the rights of its pipelines.… Read the rest

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Historical Perspective of Corporate Governance

The seeds of modern corporate governance were probably sown by the Watergate scandal in the United States.   The global movement for better corporate governance progressed in fits and starts from the mid-1980s up to 1997.   There were the odd country-level initiatives such as the Cadbury Committee Report in the United Kingdom (1992) or the recommendations of the National Association of Corporate Directors of the US (1995).   It would be fair to say, however, that such initiatives were few and far between.   And while there were the occasional international conferences on the desirability of good corporate governance, most companies — both global and Indian knew little of what the phrase meant, and cared even less for its implications.  … Read the rest

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Business Ethics: Theories and Approaches

Business ethics is the attitude and ways in which a business is formed and the way in which a business deal with the world. Many businesses behave in divert or different ways depend on the way it’s formed by the owners of the business. Business ethics can be described as principle and standard that is guiding behavior of people in the business. Many business have different reputation depends on the ways in which they are formed some business have bad reputation while some have bad reputation. Some businesses are formed for money making venture while some are formed because they want to make money and at the same time want to give its customers maximum satisfaction.… Read the rest

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