Corporate Governance, Ethics and Corporate Social Responsibility Notes
Subject Overview
This paper familiarizes students with corporate governance practices, business ethics and CSR — the conceptual framework of governance and global models, Indian committee reports on governance reform, business ethics across functional areas (marketing, HR, finance), and CSR through the triple bottom line, models and reporting initiatives. A 4-credit core theory paper.
Subject at a glance
4
Units
39
Topics
4
Credits
4
Infographics
Unit-wise Syllabus
4 units — open any unit for detailed topic-wise notes, diagrams and important exam questions
- History of corporate form and models
- corporate objectives and ownership patterns
- agency problems
- global governance models (Anglo-American, German/Japanese/French relationship models)
- Cadbury Report
- Hampel Report
- OECD recommendations
- SOX Act
- whistle-blowing
Ownership
Dispersed shareholders
Concentrated: banks, groups, cross-holdings
Board
Single board, independent directors
Two-tier (Germany) or insider-heavy (Japan)
Focus
Shareholder value
Stakeholders and long-term relationships
Control by
Capital markets
Banks and stakeholders
Study guide
This unit covers the history of the corporate form, objectives and ownership patterns, agency problems, global governance models, the Cadbury and Hampel Reports, OECD recommendations, the Sarbanes-Oxley Act and whistle-blowing. Understand how the agency problem arises when owners and managers are different people.
- Indian governance developments — CII
- Kumaramangalam Birla
- Narayana Murthy
- Naresh Chandra and JJ Irani committee reports
- legal and regulatory changes
- definition and nature of ethics
- causes of unethical behaviour
- ethics vs morality vs law
- ethical theories
- ethical dilemmas
- code of ethics
- 1
CII Code (1998)
Voluntary code
- 2
Kumaramangalam Birla Committee (1999)
Led to Clause 49
- 3
Naresh Chandra Committee (2002)
Auditor independence
- 4
Narayana Murthy Committee (2003)
Audit committees, disclosures
- 5
JJ Irani Committee (2005)
Basis of Companies Act 2013
- 6
SEBI LODR (2015)
Current listing rules
Study guide
You study Indian governance developments: the CII, Kumaramangalam Birla, Narayana Murthy, Naresh Chandra and JJ Irani committees, legal and regulatory changes, and ethics: causes of unethical behaviour, ethics versus morality versus law, theories, dilemmas and codes of ethics. Learn what each committee recommended.
- Ethics in environmental aspects
- marketing
- human resource management
- top management
- financial markets and investor protection
- ethical responsibility toward competitors and partners
- managerial integrity
- ethical leadership
- ethics in global business
Marketing
Honest ads, fair pricing
HR
Fair treatment, privacy
Finance
Insider trading, true disclosure
Environment
Pollution, sustainability
Top management
Integrity and ethical leadership
Study guide
You study ethics in the environment, marketing, HR, top management, financial markets, investor protection and global business, with managerial integrity and ethical leadership. Discuss one real ethical scandal and identify its failures.
- Nature of social responsibility
- CSR through the triple bottom line
- CSR and business ethics
- CSR and corporate governance
- environmental aspects of CSR
- CSR models
- drivers of CSR
- global reporting initiatives
- major CSR codes
- CSR initiatives in India
People
Social: employees, community
Planet
Environmental: resources, emissions
Profit
Economic: value creation
Study guide
You study the nature of social responsibility, the triple bottom line, CSR and ethics, CSR and governance, environmental aspects, models, drivers, global reporting and CSR in India. Know the CSR provisions of the Companies Act.
Why Corporate Governance, Ethics and Corporate Social Responsibility Matters
Governance and ethics determine whether investors and customers trust a company, and they are major themes in boardrooms, audit, regulation and compliance careers.
How to Prepare for Corporate Governance, Ethics and Corporate Social Responsibility
- Prepare a table of governance committees and their recommendations.
- Study one governance failure such as Satyam as a case.
- Follow current CSR initiatives of Indian companies.
Corporate Governance, Ethics and Corporate Social Responsibility: Frequently Asked Questions
What is corporate governance?
Corporate governance is the system of rules, practices and processes by which a company is directed and controlled in the interests of its stakeholders.
What is whistle-blowing?
Whistle-blowing is reporting illegal or unethical conduct within an organisation to those who can act on it.