Ethics Quiz #5 Essay

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Chapter 5 ethics -Sarbanes-Oxley Act of July 30, 2002 (SOX) – after Worldcom – reformed governance and accountability framework for corporations wishing to raise funds from US public or have shares trade on stock market. -Culture of Integrity – commitment of leading-edge firms around the world to appreciate, develop and maintain this -Corporations designed to favor current executives – not in the interest of company future. -SOX = refocus governance model on responsibility of directors beyond own self-interest to that of shareholders as a whole and to the public interest. -Fiduciary Obligations of Board of Directors: reviewing company’s overall business strategy, selecting and compensating the company’s senior executives, evaluation the company’s outside auditor, overseeing the company’s financial statements, and monitoring overall company performance. Paramount Duty = safeguard interest of shareholders -Directors act in good faith, reasonable care, and best interest of corporation and shareholders. Three duties: obedience, loyalty, and due care. Obedience: must not act beyond scope of powers. Loyalty: act in good faith and not allow personal interests to prevail. Duty of Care: be diligent and prudent in managing corporation’s affairs. -Stakeholder List: Activists, Governments, Lenders + Creditors, Competitors, Employees, Customers, Suppliers, Media, Shareholders. Accountable legally to shareholders, strategically to stakeholders. -Stakeholder Impact Analysis: became more developed as have the tools employed in examining, ranking, and assessing stakeholder interests – feasible and desirable. -Stakeholder-Accountability Oriented Governance Process (SAOG): must take all stakeholder interests into account and make sure they are built into company’s vision, mission, policies, codes, practices, compliance mechanisms, and feedback arrangements. Appropriate
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