Business & Finance

Chapter # 12
Governance and ethics

Q-1) What is Governance?

Q-2) What is Corporate Governance? [ND10] 3
Q-3) What are the objectives of corporate governance? [ND10] 3
Q-4) What are the stakeholders’ governance needs?
Q-5) What are the symptoms of a serious conflict of interest?
Q-6) What is meant by ‘good practice’ in corporate governance?
Q-7) What are the key elements towards good corporate governance?
Q-8) What are the functions of financial system?
Q-9) What are the financial systems?
Q-10) What factors determine the financial system?
Q-11) What are the Characteristics of bank-based financial system?
Q-12) What are the characteristics of market-based financial system?
Q-13) In the UK households hold proportionately of their assets in the form of equity than in
Bangladesh. What does this say about UK households’ attitude to risk?
Q-14) What is governance structure?
Q-15) What are the roles of the Bangladesh Bank in promoting good governance?
Q-16) What is ethics?
Q-17) What is an ethical culture?
Q-18) What is business ethics?
Q-19) What are business ethics?
Q-20) How can an ethical culture be promoted?
Q-21) In what areas of a business would you say there were greatest pressures not to behave
ethically, and from what source does this pressure come? [IQ]
Q-22) What is social responsibility?
Q-23) What is code of ethics?
Q-24) What is agency theory?
Q-25) What are the functions of codes of ethics?
Q-26) What are the policies and procedure to support ethical behaviour?
Q-27)

Business & Finance
Chapter # 12: Governance and ethics
Q-1) What is Governance?
Governance is the system by which
business are directed and controlled. It is
concerned with exercising overall control to
ensure that the objectives of the company
are achieved in an acceptable manner.
Q-2) What is Corporate Governance?
[ND10] 3
Q-3) What are the objectives of corporate
governance? [ND10] 3
Q-4) What are the stakeholders’
governance needs?
(i) For their interests and expectations
to be reflected in the company’s
objectives,
(ii) For the scope for conflicts to be
reduced
(iii) For the company to adhere to good
practice in corporate governance.
(iv) For the company to adhere good
business ethics
Q-5) What are the symptoms of a
serious conflict of interest?
(i) Financial collapse without warning
(ii) Directors trying to disguise the true
financial performance of the
company from shareholders
(iii) Disputes over directors’
remuneration
(iv) Decisions taken by the board of
directors to satisfy their own wish
for power and rewards
Q-6) What is meant by ‘good
practice’ in corporate
governance?
Good practice in corporate governance is
concerned with disclosure of information;
judging directors’ performance and
stewardship; reducing the potential for
conflict; reconciling the interests of
shareholders and directors.
2
Q-7) What are the key elements
towards good corporate
governance?
The five key elements which support the
drives toward good corporate governance
are as follows:
(i) The board of directors
- Executive directors
- Non-executive directors
- Committees of the board of
directors as a whole
- Senior management
(ii) Shareholders
(iii) External auditors
(iv) Internal auditors
Q-8) What are the functions of
financial system?
The financial system in economy facilitates
the movement of funds from those who
have an excess of hem and to those who
need them. This means it has two main
functions:
(i) Facilitation of lending and borrowing
(ii) Transmission of money
Q-9) What are the financial systems?
There are two broad types of financial
system:
(i) Bank-based system
(ii) Market-based system
Q-10) What factors determine the
financial system?
Whether a system favours banks or the
markets is determined by how the factors
are balanced, namely:
(i) How households prefer to hold their
assets,
(ii) The of dominance of the system by
financial intermediaries and
therefore by indirect as opposed to
direct investment,
(iii) How business are financed, that is
the balance of retained earnings,
debt and equity,

Business & Finance
Chapter # 12: Governance and ethics
Q-11) What are the characteristics of
bank-based financial system?
(i) Little risk
(ii) Less access to investment in
physical assets
(iii) Institutional shareholders are
influential
(iv) Comparatively more government
regulation
(v) Banks are highly concentrated and
integrated in terms providing both
banking and non-banking services,
(vi) Bank lending is the most important
source of business finance
(vii) Bank and business are highly
integrated
(viii) Markets are volatile and speculative
Q-12) What are the characteristics of
market-based financial system?
(i) More risk
(ii) Greater access to investment in
physical assets
(iii) Markets are more important than
bank for long term finance
(iv) Comparatively unregulated
(v) Banks are more fragmented
(vi) Banks have less close relationship
with the business they lend to
Q-13) In the UK households hold
proportionately of their assets
in the form of equity than in
Bangladesh. What does this say
about UK households’ attitude
to risk? [IQ]
Equity is a more risky form of investment
that cash and cash equivalents so it would
appear that the UK households are less risk
averse than Japanese ones.
Q-14) What is governance structure?
3
Governance structure is a set of legal or
regulatory methods put in place in order to
ensure effective corporate governance.
There are two basic governance structures:
(i) Statue
(ii) Code of practice
Q-15) What are the roles of the
Bangladesh Bank in promoting
good governance?
The Bangladesh Bank is responsible for
promoting good governance. It aims to do
so by
(i) Maintaining ‘The Financial Act. 1993’
and promoting its widespread
application and enforcement.
(ii) Ensuring that related guideline,
such as that on internal control is
current and relevant.
(iii) Influencing SEC, BEI and ICAB
corporate governance development.
(iv) Helping to promote board room
professionalism and diversity.
(v) Encouraging shareholder
engagement.
Q-16) What is ethics?
Q-17) What is an ethical culture?
Q-18) What is business ethics?
Q-19) What are business ethics?
Q-20) How can an ethical culture be
promoted?
Q-21) In what areas of a business would
you say there were greatest
pressures not to behave ethically,
and from what source does this
pressure come? [IQ]
Q-22) What is social responsibility?
Q-23) What is code of ethics?
Q-24) What is agency theory?
Q-25) What are the functions of codes of
ethics?
Q-26) What are the policies and procedure
to support ethical behaviour?