CORPORATE GORVERNANCE AND ETHICS

Corporate Gorvernance and Ethics



Corporate Gorvernance and Ethics

Introduction

Corporate ethics and corporate governance become increasingly important issues as companies become larger and more powerful. While many blast such corporations as being inherently amoral or worse, many chief executive officers, as well as practical philosophers, see the clout and wealth of these businesses as being capable of service to society as well as themselves(Daily, 2011, pp: 375-386).

For thousands of years, merchants, traders, artisans and their customers dealt with each other face-to-face, and the line between business transaction and social engagement was indistinct, if present at all. The idea that the moral or immoral actions of individuals could be differentiated from the morality of businesses had little currency. But as corporations became more common and more powerful, everyday products increasingly were provided by a "faceless" business entity, raising the possibility of a larger sphere for ethics(Rose-Ackerman, 2002: pp: 1889-1918).

Ethical considerations have become so important to corporate governance in the early 21st century that they have helped change the entire definition of corporate governance. Historically, corporate governance referred to the systems and processes developed by a corporate board to direct company operations for the maximizing of shareholder profits. With the growth of corporate social responsibility in the early 21st century, companies commonly include statements of corporate citizenship and ethics in their corporate governance guidelines (Metzger, 2010, pp: 27-43).Background to the case

In recent months, the directors of Amandan Bank have been in discussions with representatives of Solus bank plc, a smaller bank based in Southern Europe with a view to acquisition. The main reason behind the acqiuisition decision is based on the fact that the Solus bank is highly profitable and had a strong customer base. It is very powerful player in the markets for both personal and corporate lending. There exist several Ethical and Corporate governance issues that Amandan bank plc will have to address regarding the proposed acquisition of Solus bank. Therefore the main purpose of the paper is to highlight those issues and implications regarding this proposed acquisition.

Importance of the case study

Ethical Corporate Governance (also called Ethical Governance) has very much become a buzzword these days, just about every company thinks its a good idea and may even proclaim to follow it, but what exactly is it, and how can we know for a sure that a company is practising what it preaches(Shleifer, 2009, pp: 599-617)?

Ethical Corporate Governance refers to the processes and policies that a company has in place to deal with issues concerning how it is administerd and conducts day to day business. It is important to remember that companies exist primary to create a product or service, which is used to generate profit. However that intention must be balanced with controls that ensure a company pursues profit without crossing over the line into the realms of unethical behaviour.

In the past many companies may have exploited their market positions to inhibit competition or even threaten local populations, ethical corporate governance exists to prevent this ...