Corporate Governance, Ethics and Culture

Recent studies on both sides of the Atlantic reveal that many people are currently unhappy with the state of ethics of business and government leaders. In the face of such scandals and malpractices, there has been a renewed emphasis on corporate governance. This paper examines the elements of an effective corporate governance program and presents several models of corporate governance models. The paper examines the characteristics of rules-based and principles-based approaches to governance and recommends a risks-based approach that optimally captures rules and principles. The concepts of freedom of indifference and freedom for excellence are discussed in light of an effective corporate governance approach, as well as the role of casuistry. One of the biggest risk factors facing companies today revolves around a company's ethical culture. It is through identifying and assessing rules-based and principles-based related risks that a company can improve its ethical culture. Ethical principles and culture must be at the cornerstone of corporate governance. It is important not to lose sight that the goal of effective corporate governance does not lie primarily in preventing corporate transgressions, but in helping to create value for the organization. What is needed is a more principle-oriented theory of corporate governance