emerging nations where corporate governance
Why do you think, at all times, companies
should adhere to ethical standards?
Companies should always uphold ethical standards
at all times because they help build trust, improve
credibility, and minimize legal and reputational
issues. In addition, upholding ethical standards also
strengthens bonds with stakeholders, and gives
businesses an edge against their competitors.
What do you think is the role of ethical
conduct in a business’ progress?
I think the role of ethical conduct in business
progress is that it is the key to achieve the success
of a business because it helps to make deeper and
stronger connections and trust from stakeholders.
With proper execution of ethical conduct, it also
increases customer loyalty, employee retention and
gains more support from the stakeholders.
How did Okpala's study, (Audit Committee
and Integrity in Financial statements: A
Preventive Mechanism For Corporate
Failures) in 2012 shed light on the dynamics
between audit committee oversight and
financial statement integrity and why was
this discovery important?
Okpala's 2012 study highlighted the crucial role of
audit committees in maintaining financial statement
integrity, demonstrating that effective oversight
can serve as a preventive mechanism against
corporate failures. This discovery was important as
it emphasized the significance of strong
governance structures in safeguarding the accuracy
and reliability of financial reporting, thereby
enhancing investor confidence and mitigating the
risk of financial misconduct.
How might the establishment of committed
audit committees with skilled members
contribute to addressing corporate failures,
particularly in developing countries and why
is this important?
Dedicated audit committees with competent
members can be established to improve financial
monitoring, ensure regulatory compliance, and
resolve company failures in emerging nations.
Competent participants can offer their knowledge
of risk management and financial reporting,
assisting in the early detection and mitigation of
such problems. This is particularly important in
standards may be less developed and regulations
less strictly enforced, making efficient oversight
even more critical to long-term economic success
and investor confidence.
In what ways can effective management
practices address weaknesses in governance,
and what are the potential consequences of
inadequate management in relation to
governance characteristics?
Assign specific tasks and responsibilities to each
person involved in governance. This ensures
everyone knows what they should be doing and
reduces confusion. Establish clear lines of
communication. Regularly update everyone
involved and encourage open discussions. This
helps prevent misunderstandings and ensures that
information flows smoothly. Regularly assess and
improve processes. Effective management involves
identifying areas for improvement and making
necessary changes to enhance efficiency and
effectiveness. Without clear management, roles
might be unclear, decisions may lack direction, and
chaos can ensue. This confusion can lead to
inefficiencies and mistakes. Without proper
management, tasks may not be coordinated
effectively. This can lead to duplication of efforts,
delays, and a general lack of efficiency in achieving
governance goals.
What role does good corporate governance
play in the long-term growth and survival of
a business?
Effective internal controls play a pivotal role in
reducing audit fees for organizations by mitigating
risks, increasing auditor efficiency, and ensuring
timely and accurate financial reporting. Well-
designed internal controls streamline the audit
process, allowing auditors to rely on them for
assurance, reducing the need for extensive testing
and potentially lowering overall audit fees. Clear
documentation of financial processes enhances
transparency, minimizing auditor inquiries and
clarifications. Compliance with regulatory
requirements, along with a demonstration of
accountability through robust internal controls,
contributes to auditors' confidence in an
organization's financial integrity, further supporting
the efficiency of the audit process and potential
cost savings.
How does corporate governance affect risk
management and decision-making processes
in organizations?
Corporate governance is crucial for organizational
success. A strong governance framework enhances
decision-making and risk management. It leads to
better outcomes for companies and stakeholders
through transparent and accountable decision-
making. Good governance involves considering all
information and impacts and balancing short-term
gains with long-term sustainability. Effective risk
management shields organizations from losses by
proactively identifying and alleviating risks,
reducing risk exposure, thus mitigating reputational
and financial damage.
What are the potential consequences of
weak corporate governance for shareholder
value, reputation, and overall business
sustainability?
A company's reputation can be damaged by weak
corporate governance, which can erode confidence
among the public, investors, suppliers, and
customers. This may result in a drop in market
value and lost commercial prospects. A company
that violates its corporate government policy may
find itself without adequate risk management. This
could eventually lead to a higher likelihood of the
business making bad choices and investments and
jeopardizing its capacity to pay back its own
creditors.
How does the principle of fairness influence
corporate governance decisions, particularly
in matters related to executive
compensation?
The principle of fairness in corporate governance
aims to ensure equitable treatment of all
stakeholders, including shareholders, employees,
and the community. In matters related to executive
compensation, fairness dictates that executives
should be compensated in a manner that aligns
with their performance and contribution to the
company, while also considering the interests of
other stakeholders. This may involve implementing
compensation structures that include performance-
based incentives, transparency in compensation
practices, and alignment with the company's long-
term goals, all of which help maintain trust and
legitimacy in the organization.
What are the warning signs or red flags that
indicate potential weaknesses or failures in
corporate governance practices?
The warning signs that include potential
weaknesses include rubber stamp boards, wherein
boards merely fulfill legal requirements without
meaningful engagement. Next is conflict of interest,
I believe prioritizing personal agendas over
organizational interests could be detrimental not
just to the board, but to the company as a whole.
Then we have role confusion, wherein there is lack
of clarity between staff responsibilities. And lastly,
inactive boards who fail to perform duties entrusted
to them.
What ethical dilemmas may arise in
executive compensation, and how can
fairness be ensured?
Some ethical dilemmas that may arise in executive
compensation include excessive pay, where
executives are paid unreasonably high salaries
compared to other employees who contributed
more effort to the success of the business; and
hidden compensation, where executives are
provided with benefits on top of their salary such
as rewarding themselves with large bonuses that
are not disclosed to other employees and
shareholders of the company which decreases
trust. To ensure fairness, companies should be
transparent about the terms of executive
compensation and that those terms are fair and
reasonable. Moreover, compensation should be
linked to measurable performance metrics to
encourage executives to align their goals with the
company and not for any conflicting interests.
What are the risks associated with excessive
executive compensation or perks that are not
aligned with organizational performance,
and how do they reflect bad corporate
governance practices?
The risks associated with excessive executive
compensation lean more on the financial risks. It
would be possible that the company will suffer
financially. Improper compensation can also be
costly at the expense of shareholders. They reflect
bad governance practices in the sense that it can
cause executives to take advantage of their
position in order to enrich themselves.
What are some examples of best practices in
shareholder engagement and communication
that support the principle of good corporate
governance?
Several best practices in shareholder engagement
and communication support the principle of good
corporate governance, including:
Transparent Reporting
- where the org provides clear and comprehensive
information to shareholders.
Shareholder Meetings
- shareholders have the opportunity to ask
questions, express concerns, and vote on important
matters.
Responsive Governance
- responsive to shareholder feedback and concerns
by addressing inquiries promptly.
Board Independence and Diversity
- maintain a diverse and independent BODs with a
mix of skills, expertise, and perspectives
How do effective risk management practices
align with the principles of good corporate
governance, and what role do they play in
safeguarding organizational interests?
Effective risk management practices and the
principles of good corporate governance go hand in
hand. They are the foundations that an entity must
have in order to properly safeguard its interests.
Some instances are the following:
● It is under good governance that it
emphasizes an entity should be transparent
in its decision-making processes. This would
then be shown when the entity would have
an open and clear communication with
stakeholders about the company’s activities,
performance, and risks. By doing so,
stakeholders would be able to understand
the risks and would then make appropriate
decisions.
● The Codes of Conduct and ethical guidelines
within an entity should be followed by its
people. It is through this that the risks
relating to non-compliance with an entity’s
rules and regulations would then be
minimized. This would then result in the
organization creating the needed culture for
it to be successful.
What are the consequences of weak
accountability mechanisms within corporate
governance structures, and how do they
undermine organizational integrity and
performance?
Weak accountability in corporate governance can
harm organizations by fostering ethical breaches,
poor decision-making, risk management failures,
lack of transparency, stifled innovation, and
decreased performance. Strong accountability
mechanisms, like clear roles, performance
evaluations, and ethical frameworks, are crucial for
mitigating these risks.
What are at least three (3) general
qualifications for a person to become
selected as a director?
 At least 1 share of stock
 College graduate of a 4 yr course
 At least 21 yrs old
 Practical understanding of the Corporation's
business
 Demonstrates Integrity and diligence
 A member in good standing of relevant
professional organizations
Aside from the general qualifications listed
earlier, what other factors are a board
member’s qualifications subject to?
- The board member’s qualifications are subject to
several factors. First, a person must be at least 21
years old and owns at least one share of stock. He
should possess practical understanding of the
corporation’s business. He must demonstrate
integrity and diligence, have relevant management
experience, and have a good standing in relevant
professional organizations. Other qualifications for
a board member in the Philippines are, he/she
must be a Filipino citizen, he/she is a graduate of a
4-year course, he/she should be 21-70 years old,
and he/she is of good moral character, among
others. Being a good member reflects the qualities
of being a good leader that is integrity, self-
awareness, courage, respect, compassion, and
resilience.

Differentiate the one-tier and two-tier board

structures. Which one do you think would be
more advantageous for a company?

One-tier boards have a single board overseeing

both strategy and operations, while two-tier boards
separate direct management and long-term
company management. I believe the better
structure depends on the company's specific
circumstances and needs. One-tier boards offer
streamlined decision-making, suitable for smaller,
agile companies. Two-tier boards provide more
checks and balances, often preferred by larger,
complex organizations. For example, a startup
might benefit from a one-tier board for quick
decision-making and agility. Conversely, a
multinational corporation might opt for a two-tier
board to ensure thorough oversight and
accountability across diverse operations.

What is the board of director’s role in a

company, and how would the absence of one
affect a company?

The board of directors supervises and controls the

management and operations of the company. They
are responsible for governance, oversight, and
major decision-making, representing the interests
of shareholders or stakeholders. The company
cannot function without a board. There would be
no one to transact business, make or sign
contracts, or to make general decisions about the
function of the company and the company may
struggle to face challenges.