Business Ethics Corporate Governance

1 BusinessEthicsandCorporateGovernance(As per the New Syllabus 2018-19 of Mumbai University for BBI, Semester V)Nidhi ChandorkarTushar AgarwalNET, MBA (HRM),HOD Department of Management Studies, Shetty College of Science, Commerceand Management Studies, , Scholar, MBA (Marketing),MBA ( Corporate Governance ), (Management),BMS Coordinator,Chandrabhan Sharma College of Arts,Science and Commerce, 9001:2008 CERTIFIED AuthorsNo part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by anymeans, electronic, mechanical, photocopying, recording and/or otherwise without the prior written permission of theauthors and the Edition : 2018 Published by:Mrs. Meena Pandey forHimalaya Publishing House Pvt. Ltd., Ramdoot , Dr. Bhalerao Marg, Girgaon, Mumbai - 400 :022-23860170, Offices:New Delhi: Pooja Apartments , 4-B, Murari Lal Street, Ansari Road, Darya Ganj,New Delhi - 110 002. Phon e: 011-23270392, 23278631; Fax: 011-23256286 Nagpur:Kundanlal Chandak Industrial Estate, Ghat Road, Nagpur - 440 : 0712-2738731, 3296733; Telefax: 0712-2721216 Bengaluru:Plot No.

2 91-33, 2nd Main Road Seshadripuram, Behind Nataraja Theatre,Bengaluru - 560 020. Phone: 08041138821, 09379847017, 09379847005 Hyderabad:No. 3-4-184, Lingampally, Besides Raghavendra Swamy Matham, Kachiguda,Hyderabad - 500 027. Phone: 040-27560041, 27550139 Chennai:New-20, Old-59, Thirumalai Pillai Road, T. Nagar, Chennai - 600 : 09380460419 Pune:First Floor, Laksha Apartment, No. 527, Mehunpura, Shaniwarpeth(Near Prabhat Theatre), Pune - 411 030. Phone: 020-24496323, 24496333;Mobile: 09370579333 Lucknow:House No. 731, Shekhupura Colony, Near Convent School, Aliganj,Lucknow - 226 022. Phone: 0522-4012353; Mobile: 09307501549 Ahmedabad:114, SHAIL , 1st Floor, Opp. Madhu Sudan House, Road, Navrang Pura,Ahmedabad - 380 009. Phone: 079-26560126; Mobile: 09377088847 Ernakulam:39/176 (New No. 60/251), 1st Floor, Karikkamuri Road, Ernakulam,Kochi - 682 011. Phone: 0484-2378012, 2378016; Mobile: 09387122121 Bhubaneswar :Plot No. 214/1342, Budheswari Colony, Behind Durga Mandap,Bhubaneswar - 751 006.

3 Phone: 0674-2575129; Mobile: 09338746007 Kolkata:108/4, Beliaghata Main Road, Near ID Hospital, Opp. SBI Bank,Kolkata - 700 010. Phone: 033-32449649; Mobile: 07439040301 DTP by:SunandaPrinted at:Rose Fine Art, Mumbai. On behalf of of any Business , in today s time, is judged not only by its revenue but also by its socialcontribution and environmental friendly strategies. Hence, the benchmarking of success is done on thebasis of triple bottom line Profit, Planet and People. Therefore, knowledge and importance of Ethicsand Governance is essential for all the budding managers, bankers, book is based on the syllabus prescribed by the University of Mumbai, which has beendesigned to educate the final year students of Banking and Insurance domain of commerce aboutethics, Governance and Corporate social responsibilities. The book deals with concepts as well as itsmechanism of application in Indian first chapter helps in developing an understanding towards the conceptual part of Ethics ingeneral and Business Ethics in specific.

4 It also covers an overview of different functional areas underthe scope of Business Ethics like marketing, foreign trade, copyright, second chapter helps in developing decision-making skill and entails about variousapproaches to reduce ethical dilemma. These mechanisms are based on the theories developed byphilosophers like Immanuel Kant, Aristotle, Jeremy Bentham, etc. Mahatma Gandhi suggestedtrusteeship principle as approach towards managing Business . The application of this principle, and ingeneral, the Gandhian approach for managing modern businesses has also been discussed in chapter also covers the functional areas like advertising and finance in light of the unethicalpractices and approaches to eliminate or minimize third chapter is dedicated to the concept of Corporate Governance . It discusses about theimportance and principles of Corporate Governance and focusses mainly on the Indian CorporateGovernance System. The mechanism of Corporate Governance in India comprises The Companies Act,2013, SEBI and Clause 49 of listing agreement.

5 The unit also helps in viewing various perspectives ofCorporate Governance by studying the ancient Indian approach towards Governance was based on the teachings of the scriptures likeArthashastra and religious scriptures like Geeta, Quran and Bible. The fourth chapter also deals withthe modern evolution of Corporate Governance in , the global perspective of Business Ethics is discussed. With the evolution of businesses,variety of scams and frauds have also taken place. The knowledge of these scams will help usdeveloping a strong and ethical Business set-up for long-term benefit of all the at a GlanceUnitModulesNo. ofLectures1 Introduction to Business Ethics102 Application of Ethical Theories in Business103 Introduction to Corporate Governance154 Genesis and Implementation of Corporate Governance in India155 Global Introduction to Business EthicsDefinition, Meaning, Nature of Ethics , Meaning of Moral and of Ethics , Importance of Ethics , Business Ethics Meaning and of Ethics in Business , Areas of Business Ethics , Meaning of Functional Ethics , Typesof Ethics According to Functions of Business Marketing Ethics , Foreign Trade Ethics andEthics Relating to relating to Free and Perfect Competitive Application of Ethical Theories in BusinessEthical Decision Making: Decision Making (Normal Dilemmas and Problems):(I) Utilitarianism (J.)

6 Bentham and Mill),(II) Deontology (I. Kant) Virtue Ethics (Aristotle). Gandhain Approach in Management and Trusteeship, Importance and Relevance ofTrusteeship Principle in Modern Business . Ethical Issues in Functional Areas of in Advertising (Truth in Advertising). Ethical Issues in Introduction to Corporate GovernanceDefinition and Conceptual Framework of Corporate Governance , Business Ethics an importantdimension to Corporate Governance , Fair and Unfair Business Practices. Theoretical Basis ofCorporate Governance , Mechanism- Corporate Governance Systems, Indian Model ofGovernance, Good Corporate Governance , Obligations towards Society and Underlying Corporate Governance (Stakeholder s Theory and Stewardship theory,Agency Theory, Separation of Ownership and Control, Corporate Governance Mechanism:Process, Indian Model, OECD, and Emphasis on Corporate Governance (TransparencyAccountability and Empowerment).4 Genesis and Implementation of Corporate Governance in IndiaIntroduction principles Arthashastra and Good Governance in ancient India, Protection ofInterest of Customers and Investors, Historical Perspective of Corporate Governance and Issuesin Corporate :Meaning, Types, Teaching from Scriptures like Gita, Quran and Bible, Value Systems of Corporate GovernanceRole of Board of Directors and Board Structure, Role of the Non-executive Director, Role ofAuditors, SEBI Growth of Corporate Governance .

7 Role of Government, Corporate Governancein India. Accounting Standards and Accounting Disclosures. Finance Reporting and CorporateGovernance, Non-accounting Regulations in Corporate Governance , Corporate Governance andCSR, Family Owned Business - Background, Family Businesses in India, Need forProfessionalization and Transparency in Family Global ScenarioBusiness Ethics in Global EconomyEthics in the Context of Global Economy, Relationship between and Business Development, Role of Business Ethics in Building a Civilized Governance and Issues Related to : Meaning, Causes and and Scams in Banks, Insurance Companies, Financial Institutions, Measures to OvercomeFraud and Corruption, Zero Tolerance of Marks:75 Questions to be set:05 Duration:2 questions are compulsory carrying 15 Marks QuestionsSub-questions to be asked (10) and to be answered (any 08)Sub-questions to be asked (10) and to be answered (any 07)(*Multiple Choice/True or False/Match the Columns/Fill in the Blanks)15 Length QuestionORFull Length Question15 Marks15 Length QuestionORFull Length Question15 Marks15 Length QuestionORFull Length Question15 Marks15 QuestionsTheory QuestionsORShort NotesTo be asked (05)To be answered (03)08 Marks07 Marks15 MarksNote:Theory question of 15 Marks may be divided into two sub-questions of 7/8 and 10/5 1 Introduction to Business Ethics1 - 17 Chapter 2 Application of Ethical Theories in Business18 - 28 Chapter 3 Introduction to Corporate Governance29 - 61 Chapter 4 Genesis and Implementation of Corporate Governance in India62 - 87 Chapter 5 Global Scenario Business Ethics in Global Economy88 - 101 Chapter1 Introduction to Business Ethics Ethics .

8 Definition, Meaning and Nature Meaning of Moral & Ethics Types of Ethics Importance of Ethics Business Ethics -Meaning and Nature Importance of Ethics in Business Areas of Business Ethics Meaning of Functional Ethics Types of Ethics According to Functions of Business Marketing Ethics , ForeignTrade Ethics and Ethics Relating to Copyright Ethics relating to Free and Perfect Competitive MarketThe concept of Ethics was introduced by Socrates, and defined as a philosophical discipline byAristotle. The word Ethics have been taken from the ancient Greek word ethikos which itself isderived from the Greek word ethos, meaning custom or character. In philosophy,in general, ethicalbehavior is that which is good. The field of moral philosophy involves developing, defending, andrecommending concepts of right and wrong behavior. These concepts do not change as one s desiresand motivations. They are not relative to the , Ethics can be said to be the basic concepts and fundamental principles of decent humanconduct.

9 It is a philosophy which includes study of universal values such as the essential equality ofgender, human or natural rights, obedience to the law of land, concern for health and safety and,increasingly, also for the natural Business Ethics and Corporate GovernanceETHICS: DEFINITION, MEANING AND NATURED efinition and MeaningEthics can be said to be the field of study that is concerned with values, standards, morals,principles etc., which are used to base ones decisions or actions. It is a discipline tries to set up criteriafor good and bad behavior/actions, and to evaluate the motives for these actions, and a branch of philosophy that involves systematizing, defending, and recommendingconcepts of right and wrong to resolve questions of human morality by definingconcepts such as good and evil, right and wrong, virtue and vice, justice and deals with fundamental issues of practical decision making, and its major concerns includethe nature of ultimate value and the standards by which human actions can be judged right or of EthicsEthics is a study of human behaviour in different external situations.

10 Humans by default has acapability of judging good and bad, right and wrong behaviour based on the situation. Therefore Ethics ,though a relative and subjective term has some common features:(i) Based on Moral and Social Values: Ethics has its roots in the individual values called asmoral values and collective values also called as social values. As any system ororganisation is a sub set of society and Ethics are associated with human behaviour it cannotviolate or contradict social and moral values.(ii) Ethics as Social Science: Ethics is a study under social science. Though there is anargument whether Ethics is a science or an art. But experts are of the opinion that Ethics ismore of science than an art because it is a systematic knowledge about moral behaviour andconduct of human beings.(iii) Ethics as Normative Science:The term normative implies a guide or control of action. So,normative Ethics tells us what we ought to do.(iv) Voluntary: Ethics deals with human conduct that is voluntary and not formed naturally byany persons or his circumstances.