Corporate Goverance

Corporate governance is concerned with holding the balance between economic

and social goals and between individual and communal goals. The corporate
governance framework is there to encourage the efficient use of resources and
equally to require accountability for the stewardship of those resources. This article
outlines the relationship between corporate governance and corporate social
responsibility (CSR). It begins by examining the role of corporate governance in
creating value for shareholders. It focuses on the actions of the corporation and the
board toward its shareholders and other stakeholders, i.e., how corporate
governance serves or fails to serve their interests. It covers the assumptions that
underlie theories of corporate governance and the expected outcomes of various
board structures and compositions. It then examines the state of corporate
democracy, the issue of accountability, and key legislation relative to corporate
governance.
 Corporate Governance Rating
• The Corporate Governance Ratings is a judgment on relative standing of
an entity with regard to adoption of corporate governance practices.
• Corporate Governance Ratings (CGR) evaluates the governance
practices of companies. Investors and other stakeholders get benefited
as they are able to differentiate companies based on degree of
corporate governance.
• Companies can also use these ratings as reference and set benchmarks
for further improvement.

.
 Managerial Ethics
• Ethics is the basis of determining what is wrong or
what is right in a given situation. It is an individual’s
personal beliefs and perception while taking decisions.
• Managerial ethics is the standard of social norms and
values, truth, and justice that is accepted by the
manager in the decision-making process. It is the
moral principles and rules of conduct that are applied
in the business.
• Ethical decision-making refers to the process of evaluating and choosing among
alternatives in a manner consistent with ethical principles. In making ethical
decisions, it is necessary to perceive and eliminate unethical options and select
the best ethical alternative.
• The process of making ethical decisions requires:
• Commitment: The desire to do the right thing regardless of the cost.
• Consciousness: The awareness to act consistently and apply moral convictions to
daily behavior.
• Competency: The ability to collect and evaluate information, develop
alternatives, and foresee potential consequences and risks.
 Organization Social Responsibility
• Organizational Social Responsibility is defined as
the “responsibility of an organization according
to the impact of its decisions and activities on
the society and the environment”
• Social responsibility is an ethical framework and
suggests that an individual has an obligation to
work and cooperate with other individuals and
organizations for the benefit of society at large.
• Social responsibility is a duty every individual
has to perform so as to maintain a balance
between the economy and the ecosystems.
 Approaches to social responsibility:
• Social Obstruction: The organization which performs as low as possible
social responsibility.  And sometimes even crosses the ethical
boundaries. E.g. adulteration in products.
Social Obligation: The organization which only performs that much
social responsibility which is bound by laws. E.g. writing warning in
cigarette packets.
• Social Response: The organization which performs those activities which
are legal and ethical. Such as providing toothpaste and toothbrush in
dental camp, collecting blood for Nepal Red cross Society etc.
• Social Contribution: Organization itself participates actively in the
development and welfare of the society. E.g. Building hospitals, schools,
conducting skill development program etc.