OVBE Assignment TASMAC

Apr 16, 2010

Ethical Issues in Corporate Governance

Vivekanandan M

Presented by…..

Date: Slide No: 1 Vivekanandan M

OVBE Assignment TASMAC

Apr 16, 2010

Ethical Issues in Corporate Governance

Introduction to Corporate Governance

Team Member Date: Slide No: 2

Three models of Management

Ethical views in Corporate Governance

Shareholder Activism

Dilemmas and contradiction in Corporate Governance

Introduction to Galleon Scam

Ethical issues in Corporate Governance of Galleon

Conclusion

OVBE Assignment TASMAC

Apr 16, 2010

Ethical Issues in Corporate Governance

Date: Slide No: 3 Vivekanandan M

Introduction to Corporate Governance

Corporate governance is defined as a system to govern the way in

which business is directed, administered and controlled.

SEBI (Securities Exchange Board of India) has come with the

standards for Corporate governance for financial failure.

CII (Confederation of Indian Industries) has come with the standards

for Corporate Governance focusing on transparency and governance.

Ministry of Corporate Affairs, Government of India has set up NFGC (National Foundation for Corporate Governance) in making India the

best in Corporate Governance.

OVBE Assignment TASMAC

Apr 16, 2010

Ethical Issues in Corporate Governance

Date: Slide No: 4 Vivekanandan M

Three models of Management

Immoral management

Moral management

Amoral management

Oppose what is ethical

Conforms to high standard of ethical behavior

Casual or careless about ethical considerations

OVBE Assignment TASMAC

Apr 16, 2010

Ethical Issues in Corporate Governance

Date: Slide No: 5 Vivekanandan M

Ethical views in Corporate Governance

Unitarian view – morality and ethics are related to business.

Separatist view – business is to generate profits and morality and

ethics do not form a part of business.

Integration view – Ethical behavior and business are integrated.

External forces like government, business market and law will guide

ethical behavior of business.

OVBE Assignment TASMAC

Apr 16, 2010

Ethical Issues in Corporate Governance

Date: Slide No: 6 Vivekanandan M

Shareholder activism is the way in which shareholders assert their

powers as owners of company to influence company behavior.

In Unitarian view, shareholder activism against immoral and amoral

management is ethical.

In Separatist view – Immoral and Amoral management are ethical,

as they work towards profit generation.

In Integration view, shareholder activism against immoral and amoral management is ethical.

Shareholder Activism

OVBE Assignment TASMAC

Apr 16, 2010

Ethical Issues in Corporate Governance

Date: Slide No: 7 Vivekanandan M

Eg: The objective of any business is to make and supply goods or

services to customers, which will lead to prosperity of the economy.

Business which make goods like – alcohol, cigarettes, etc.. are ethical

dilemma for business, as society sees these products as goods that

are not good for the society.

The contradiction is, these companies offer employment opportunities

to many people in the society.

Dilemmas and Contradiction in Corporate Governance

OVBE Assignment TASMAC

Apr 16, 2010

Ethical Issues in Corporate Governance

Date: Slide No: 8 Vivekanandan M

Galleon is a hedge fund, which involved in insider trading.

The amount involved in the scam is over billion dollar.

Galleon CEO, Mr. Raj Rajarathanam was charge sheet by FBI on Oct 16, 2009.

Galleon got tips from credit rating firms and other hedge funds like –

Intel Capital, IMB, McKinsey.

Introduction to Galleon Scam

OVBE Assignment TASMAC

Apr 16, 2010

Ethical Issues in Corporate Governance

Date: Slide No: 9 Vivekanandan M

Galleon management followed immoral management style.

Their main objective was profit generation.

Their strategy was to exploit opportunity.

Ethical Issues in Corporate Governance of Galleon Scam

OVBE Assignment TASMAC

Apr 16, 2010

Ethical Issues in Corporate Governance

Date: Slide No: 10 Vivekanandan M

Corporate can introduce a new role Chief Ethical Officer, who will look

into the code of ethics followed by every group in the organization.

Periodic internal audit to ensure all the group are in compliance with

the standard.

Periodic training to all employees.

Conclusion

OVBE Assignment TASMAC

Apr 16, 2010

Ethical Issues in Corporate Governance

Thank You!

Team Member Date: Slide No: 11