emerging nations where corporate governance

Why do you think, at all times, companies standards may be less developed and regulations
should adhere to ethical standards? less strictly enforced, making efficient oversight
Companies should always uphold ethical standards even more critical to long-term economic success
at all times because they help build trust, improve and investor confidence.
credibility, and minimize legal and reputational
issues. In addition, upholding ethical standards also In what ways can effective management
strengthens bonds with stakeholders, and gives practices address weaknesses in governance,
businesses an edge against their competitors. and what are the potential consequences of
inadequate management in relation to
What do you think is the role of ethical governance characteristics?
conduct in a business’ progress?
Assign specific tasks and responsibilities to each
I think the role of ethical conduct in business person involved in governance. This ensures
progress is that it is the key to achieve the success everyone knows what they should be doing and
of a business because it helps to make deeper and reduces confusion. Establish clear lines of
stronger connections and trust from stakeholders. communication. Regularly update everyone
With proper execution of ethical conduct, it also involved and encourage open discussions. This
increases customer loyalty, employee retention and helps prevent misunderstandings and ensures that
gains more support from the stakeholders. information flows smoothly. Regularly assess and
improve processes. Effective management involves
How did Okpala's study, (Audit Committee identifying areas for improvement and making
and Integrity in Financial statements: A necessary changes to enhance efficiency and
Preventive Mechanism For Corporate effectiveness. Without clear management, roles
Failures) in 2012 shed light on the dynamics might be unclear, decisions may lack direction, and
between audit committee oversight and chaos can ensue. This confusion can lead to
financial statement integrity and why was inefficiencies and mistakes. Without proper
this discovery important? management, tasks may not be coordinated
effectively. This can lead to duplication of efforts,
Okpala's 2012 study highlighted the crucial role of delays, and a general lack of efficiency in achieving
audit committees in maintaining financial statement governance goals.
integrity, demonstrating that effective oversight
can serve as a preventive mechanism against What role does good corporate governance
corporate failures. This discovery was important as play in the long-term growth and survival of
it emphasized the significance of strong a business?
governance structures in safeguarding the accuracy
and reliability of financial reporting, thereby Effective internal controls play a pivotal role in
enhancing investor confidence and mitigating the reducing audit fees for organizations by mitigating
risk of financial misconduct. risks, increasing auditor efficiency, and ensuring
timely and accurate financial reporting. Well-
How might the establishment of committed designed internal controls streamline the audit
audit committees with skilled members process, allowing auditors to rely on them for
contribute to addressing corporate failures, assurance, reducing the need for extensive testing
particularly in developing countries and why and potentially lowering overall audit fees. Clear
is this important? documentation of financial processes enhances
transparency, minimizing auditor inquiries and
Dedicated audit committees with competent clarifications. Compliance with regulatory
members can be established to improve financial requirements, along with a demonstration of
monitoring, ensure regulatory compliance, and accountability through robust internal controls,
resolve company failures in emerging nations. contributes to auditors' confidence in an
Competent participants can offer their knowledge organization's financial integrity, further supporting
of risk management and financial reporting, the efficiency of the audit process and potential
assisting in the early detection and mitigation of cost savings.
such problems. This is particularly important in
How does corporate governance affect risk What are the warning signs or red flags that
management and decision-making processes indicate potential weaknesses or failures in
in organizations? corporate governance practices?

Corporate governance is crucial for organizational The warning signs that include potential
success. A strong governance framework enhances weaknesses include rubber stamp boards, wherein
decision-making and risk management. It leads to boards merely fulfill legal requirements without
better outcomes for companies and stakeholders meaningful engagement. Next is conflict of interest,
through transparent and accountable decision- I believe prioritizing personal agendas over
making. Good governance involves considering all organizational interests could be detrimental not
information and impacts and balancing short-term just to the board, but to the company as a whole.
gains with long-term sustainability. Effective risk Then we have role confusion, wherein there is lack
management shields organizations from losses by of clarity between staff responsibilities. And lastly,
proactively identifying and alleviating risks, inactive boards who fail to perform duties entrusted
reducing risk exposure, thus mitigating reputational to them.
and financial damage.
What ethical dilemmas may arise in
What are the potential consequences of executive compensation, and how can
weak corporate governance for shareholder fairness be ensured?
value, reputation, and overall business
sustainability? Some ethical dilemmas that may arise in executive
compensation include excessive pay, where
A company's reputation can be damaged by weak executives are paid unreasonably high salaries
corporate governance, which can erode confidence compared to other employees who contributed
among the public, investors, suppliers, and more effort to the success of the business; and
customers. This may result in a drop in market hidden compensation, where executives are
value and lost commercial prospects. A company provided with benefits on top of their salary such
that violates its corporate government policy may as rewarding themselves with large bonuses that
find itself without adequate risk management. This are not disclosed to other employees and
could eventually lead to a higher likelihood of the shareholders of the company which decreases
business making bad choices and investments and trust. To ensure fairness, companies should be
jeopardizing its capacity to pay back its own transparent about the terms of executive
creditors. compensation and that those terms are fair and
reasonable. Moreover, compensation should be
How does the principle of fairness influence linked to measurable performance metrics to
corporate governance decisions, particularly encourage executives to align their goals with the
in matters related to executive company and not for any conflicting interests.
compensation?
What are the risks associated with excessive
The principle of fairness in corporate governance executive compensation or perks that are not
aims to ensure equitable treatment of all aligned with organizational performance,
stakeholders, including shareholders, employees, and how do they reflect bad corporate
and the community. In matters related to executive governance practices?
compensation, fairness dictates that executives
should be compensated in a manner that aligns The risks associated with excessive executive
with their performance and contribution to the compensation lean more on the financial risks. It
company, while also considering the interests of would be possible that the company will suffer
other stakeholders. This may involve implementing financially. Improper compensation can also be
compensation structures that include performance- costly at the expense of shareholders. They reflect
based incentives, transparency in compensation bad governance practices in the sense that it can
practices, and alignment with the company's long- cause executives to take advantage of their
term goals, all of which help maintain trust and position in order to enrich themselves.
legitimacy in the organization.
What are some examples of best practices in rules and regulations would then be
shareholder engagement and communication minimized. This would then result in the
that support the principle of good corporate organization creating the needed culture for
governance? it to be successful.

Several best practices in shareholder engagement

and communication support the principle of good
corporate governance, including: What are the consequences of weak
accountability mechanisms within corporate
Transparent Reporting governance structures, and how do they
undermine organizational integrity and
- where the org provides clear and comprehensive performance?
information to shareholders.
Weak accountability in corporate governance can
Shareholder Meetings harm organizations by fostering ethical breaches,
poor decision-making, risk management failures,
- shareholders have the opportunity to ask lack of transparency, stifled innovation, and
questions, express concerns, and vote on important decreased performance. Strong accountability
matters. mechanisms, like clear roles, performance
evaluations, and ethical frameworks, are crucial for
Responsive Governance mitigating these risks.
- responsive to shareholder feedback and concerns What are at least three (3) general
by addressing inquiries promptly. qualifications for a person to become
selected as a director?
Board Independence and Diversity
 At least 1 share of stock
- maintain a diverse and independent BODs with a  College graduate of a 4 yr course
mix of skills, expertise, and perspectives
 At least 21 yrs old
 Practical understanding of the Corporation's
How do effective risk management practices
business
align with the principles of good corporate
 Demonstrates Integrity and diligence
governance, and what role do they play in
 A member in good standing of relevant
safeguarding organizational interests?
professional organizations
Effective risk management practices and the
Aside from the general qualifications listed
principles of good corporate governance go hand in
earlier, what other factors are a board
hand. They are the foundations that an entity must
member’s qualifications subject to?
have in order to properly safeguard its interests.
Some instances are the following:
- The board member’s qualifications are subject to
several factors. First, a person must be at least 21
● It is under good governance that it
years old and owns at least one share of stock. He
emphasizes an entity should be transparent
should possess practical understanding of the
in its decision-making processes. This would
corporation’s business. He must demonstrate
then be shown when the entity would have
integrity and diligence, have relevant management
an open and clear communication with
experience, and have a good standing in relevant
stakeholders about the company’s activities,
professional organizations. Other qualifications for
performance, and risks. By doing so,
a board member in the Philippines are, he/she
stakeholders would be able to understand
must be a Filipino citizen, he/she is a graduate of a
the risks and would then make appropriate
4-year course, he/she should be 21-70 years old,
decisions.
and he/she is of good moral character, among
● The Codes of Conduct and ethical guidelines
others. Being a good member reflects the qualities
within an entity should be followed by its
of being a good leader that is integrity, self-
people. It is through this that the risks
relating to non-compliance with an entity’s
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.