Ethics, corporate governance and social responsibility Flashcards Preview

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Flashcards in Ethics, corporate governance and social responsibility Deck (20)
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How can a government influence the economy?

Legal and market regulations
corporate governance and social responsibility


Define: Fiscal Policy.

Government policy on taxation and government spending


What are the differences between direct and indirect taxes?

Direct - Income and corporate tax
Indirect - VAT , duty fuel and council tax


Define: Monetary policy

government policy on money supply, the monetary system, interest rates and the availability of credit.


What happens if interest rises?

Spending falls
Investment falls
Foreign interest
Exchange rate increases
Inflation rate falls


Define: CPA

Corporate political activities.
The involvement of companies in the political process with the aim of influencing policies towards their preferences


What are the types of CPS?

Buffering - Warning the government about the impact
Bridging - being aware of new legislations


What are the institutes involved in the global trade and growth?

The G8 (Russia, GB, USA, Japan, Canada, Italy, France, Germany)
World Bank


What are the different market regulations?

The Competition Act 1998
Industry regulators
The competition and market authority
The restrictive practices court
European union competition court
Self regulation


Define: Corporate governance

The system in which companies and other entities are directed and controlled


What are the types of stakeholders?

Internal - Employees and management
Connected - Shareholders, customers, suppliers, financiers
External - Community, government, trade unions, pressure groups


Design the Mendelow diagram

Level of interest


What are the failures of corporate governance?

Domination by a single individual
Lack of involvement of board
Lack of adequate control function
Lack of supervision
Lack of independent scrutiny
Lack of contact with shareholders
Emphasis on short term liability
Misleading accounts and information


Benefits of corporate governance?

Risk reduction
External support


Define UK Corporate Governance Code

Government led Governance code mainly for the FTSE350. Companies must comply or explain any departures from it in the financial statements


What is the UK Corporate Governance Code Framework? LEARR

Leadership (chairman, chief executive, EDs and NEDs)
Effectiveness (board should have a wide range of skills)
Accountability (present a balanced assessment)
Remuneration (balance of directors and NEDs)
Relations with shareholders - AGM meetings


Factors to determine if something is ethically wrong?

Values - rights and obligations from society
Principles - eg. CIMAs ethical principles
Motivation - why a person acted as they did
Consequences - does the outcome justify how it was carried out.


What are the range of approaches when making ethical decisions? UPACE

Egoists - looks after their own needs
Pluralists - Considers if stakeholders are impacted
Absolutists - is it fundamentally correct? Legal?
Consequentialists - focuses of the consequences
Utilitarians - maximising the benefit to society


What are CIMAs fundamental principles?

Integrity - Not to be party to anything misleading
Objectivity - avoiding all forms of bias, prejudice and partiality
Professional competence and due care- remain up to date
Professional behavior - protect CIMAs reputation


What are Caroll and Buchholtz's layers of CSR?

Economic responsibilities - Make sure the company is making a return for shareholders
Legal responsibilities - To obey the law
Ethical responsibilities - Must a ethically
Philanthropic responsibilities - Donations