Good Corporate Governance
“Good corporate governance, ethics and social responsibility is essential for increasing and maintaining shareholders value”
Corporate governance
Corporate governance of controlling and directing the companies would impact the corporate performance, which would also affect the shareholders’ value.
Example 1:
John Felderhof, being the vice chairman of Bre-X, stating that he did not aware of the scandal.
He is not qualified to be the board of director of the company as he did not aware of the Scandal -> lack of responsibilities
The scandal is not an ethical dealing which causes bad reputations of the company -> causes the fall of the stock price
He did not make principled decisions or risk management but to withdraw all his capital before the stock crashed -> devaluating the shareholder value by committing fraud and not being responsible
Example
Ethics
Moral code of conduct for what is right and wrong
Example 1:
Enron – hid financial losses using the mark to market accounting
Made their projected profits listed under their actual profits within their financial books
Shareholders have lost $11 billions after the stock price drops due to the fraud that Enron commits -> Customers are misinformed by the financial statements and loses all the money that they have invested in the company
(http://www.ukessays.com/essays/accounting/the-enron-scandal-and-ethical-issues-accounting-essay.php)
Example 2:
Corporate social responsibility
"A company’s sense of responsibility towards the community and environment (both ecological and social) in which it operates.
Ethical consumerism
Environmental and social implication of company’s decisions will affect the decision of invertors
Attract investors
Avoid lawsuit and potential annual investigation
Socially responsible investing
Shareholders and inverters are using their capital to encourage responsible behavior.
Keep current customers
Increase in share value
Being socially responsible leveraging the media and Internet
Corporate governance
Corporate governance of controlling and directing the companies would impact the corporate performance, which would also affect the shareholders’ value.
Example 1:
John Felderhof, being the vice chairman of Bre-X, stating that he did not aware of the scandal.
He is not qualified to be the board of director of the company as he did not aware of the Scandal -> lack of responsibilities
The scandal is not an ethical dealing which causes bad reputations of the company -> causes the fall of the stock price
He did not make principled decisions or risk management but to withdraw all his capital before the stock crashed -> devaluating the shareholder value by committing fraud and not being responsible
Example
Ethics
Moral code of conduct for what is right and wrong
Example 1:
Enron – hid financial losses using the mark to market accounting
Made their projected profits listed under their actual profits within their financial books
Shareholders have lost $11 billions after the stock price drops due to the fraud that Enron commits -> Customers are misinformed by the financial statements and loses all the money that they have invested in the company
(http://www.ukessays.com/essays/accounting/the-enron-scandal-and-ethical-issues-accounting-essay.php)
Example 2:
Corporate social responsibility
"A company’s sense of responsibility towards the community and environment (both ecological and social) in which it operates.
Ethical consumerism
Environmental and social implication of company’s decisions will affect the decision of invertors
Attract investors
Avoid lawsuit and potential annual investigation
Socially responsible investing
Shareholders and inverters are using their capital to encourage responsible behavior.
Keep current customers
Increase in share value
Being socially responsible leveraging the media and Internet