Philippine Christian University - Dasmarinas Campus

JOMARK V. YBAROLA GOVERNANCE

BS ACCOUNTANCY- 3B
Reflection-Summary (Lesson 8-10)

1. If the shareholders are the real owners of the corporation, why do we need to
prioritize their rights?

Prioritization of shareholder rights is essential for good corporate governance. It is

one of the pillars of corporate governance since they are the main sources of funding
and their investment helped to run the business. For the efficient functioning of the
capitalization, the fundamental requirement is that the investor rights are well protected.
The central element in corporate governance is the challenges arising out of separation
of ownership and control. The shareholders are the true owners of a corporate and the
governance function controls the operations of the corporate. There is a strong
likelihood that there is a mismatch between the expectations of the shareholders and
the actions of the management. Therefore there is a need to lay down clearly the rights
of the shareholders and that of the management. Shareholders are the ones who
sustain the financial matters of an organization and it is important to protect and
prioritize them as well as their rights.

2. Which interest is the priority of the company, shareholders or stakeholders?

Explain your answer.

Both shareholders and stakeholders are vital to a company’s growth.

Shareholders provide the funds that allow companies to invest and innovate, while
stakeholders have a stake in the company’s long-term performance. However,
stakeholders can be internal, such as employees, shareholders and managers but also
it can be external. They are parties that are not directly in a relationship with the
organization itself, but still the organization’s actions affect it, such as
suppliers, vendors, creditors, the community and public groups. Basically, stakeholders
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are those who will be impacted by the project when in progress and those who will be
impacted by the project when completed, and this is the reason why stakeholders have
more interest priority in the company. To sum it up, stakeholders tend to have a long-
term relationship with the organization. It’s not as easy to pull up stakes, so to speak, as
it can be for shareholders. However, their relationship to the organization is tied up in
ways that make the two reliant on one another. The success of the organization or
project is just as critical, if not more so, for the stakeholder over the shareholder.
Employees can lose their jobs, while suppliers could lose income.

3. Search the net or other resources for an example of a real-life experience of

corporate non-compliance. State the case and how it was dealt with. Did you
agree on the outcome of the case? Why or why not?

Corporate scandals, highly publicized lawsuits, fines totaling millions of dollars-

these typically aren't scenarios you want associated with your company name. Today,
compliance is one of the most important parts of business, yet only 40 percent of
companies say they are thoroughly prepared for a compliance audit. To keep out of hot
water and uphold compliance standards, businesses must adhere to both internal
policies and procedures as well as federal and state laws. Compliance on the other
hand refers to rules, regulations laws and policies that an organization has to abide by.
These compliance standards are very important and protect an organization and its
stakeholders.

While commitment to workforce compliance must stem from executive leaders, the daily
activity of carrying it out often falls on the shoulders of HR professionals who must
ensure that employees across every business unit and division are uniformly trained on
policies and procedures on an ongoing basis to minimize risk. By understanding the
consequences of non-compliance and being armed with the right tools HR executives
can ensure their organization stays on the right track. Here, we explore the risks of non-
 Philippine Christian University - Dasmarinas Campus

compliance and how to stay on the right track.  Fresenius Medical Care North
America (FMCNA) agreed to pay $3.5 million to settle violations. Not only can lawsuits
result in fines, penalties and settlement expenses, but if a company leader has to step
down, stock prices can drop and the company as a whole can take an even larger hit.
Texas Instruments, for example, saw shares decline 2.2 percent just hours after their
CEO stepped down over code of conduct violations. Simply adhering to laws and
standards to begin with is generally much less costly than dealing with the financial
consequences of non-compliance. Legal action and criminal charges are another
potential result of failure to comply with employee compliance laws such as workforce
safety, corporate governance and stock management. Enron, for instance, was one of
the most widely-reported corporate accounting scandals of all time. Executives
knowingly hid billions of dollars of company debt, which eventually bankrupted the
company and landed the CEO in jail.

Remember, non-compliance affects the entire organization. Executives are a

critical component of helping businesses adhere to both internal policies and protocols
as well as federal and state laws. Prioritize communication around workforce
compliance initiatives, empower employees with the right training and stay up-to-date
with changes to regulations to minimize company risk.

4. What is the most unforgettable learning you got from this lesson that will help you
achieve your goal?

The organizations need to keep in mind the challenges while ideally opting for a
holistic, proactive and an integrated approach. Laying your organization’s resources into
good governance and corporate compliance will help them to create sustainable
environment, improve employer-employee relationship, more resilient and enhances
the potential for increased performance outcomes and profitability; therefore
compliance should be a cornerstone of your organizational culture. However,
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aside from the internal control and behavioral structure of an organization, it is

more important to value the shareholders and its rights. Shareholders are the
owners of companies. Shareholders also play an important role in the financing,
operations, governance and control aspects of a business. Basically, in order for an
organization to become profitable and successful, it is crucial to protect the internal
and external control of the company with the touch of standardized and holistic
manners.

Reference:

https://www.cornerstoneondemand.com/resources/articles/what-are-risks-employee-
compliance-violations/