Corporate governance as an instrument for ethical behaviour in Organizational success

Abstract

Corporate governance based on the ethical values is leadership that has the rules, processes, or laws by which businesses are operated, regulated, and controlled, the internal factors are defined by the officers, stockholders or constitution of a corporation, as well as to external forces such as consumer groups, clients, and government regulations. A corporate governance perspective committed to ethical behaviors in business is very essential for business growth, the organization ethical operations and culture has been on the periphery of corporate governance and board leadership, linked mainly to corporate reputation. However, in today’s globalized and interconnected world, investors and other stakeholders have come to recognize that environmental, social, and governance based on the ethical responsibilities of a company as integral to its performance and long-term sustainability. Internal control procedures and policies implemented by an entity's board of directors must be in line with the values of the organization, audit committee, management, and other personnel to provide reasonable assurance of the entity in achieving its objectives related to reliable financial reporting, operating efficiency, and compliance with laws and regulations. Internal auditors in an organization should be able to test the design and implementation of the entity's internal control procedures and the reliability of its financial reporting. The global financial crisis has heightened the need for corporate boards of directors to provide well informed strategic direction and engage in oversight that stretches beyond short-term financial performance. Doing so prepares companies to more comprehensively address risks, by anticipating potentially adverse impacts on people and the environment and managing tangible and reputational risks. It can also generate wealth by creating shareholder value through an increase in business opportunities and broader access to markets. In recent years, corporate governance based on the ethical values has received increased attention because of high-profile scandals involving abuse of corporate power and, in some cases, alleged criminal activity by corporate officers. An integral part of an effective corporate governance regime includes provisions for civil or criminal prosecution of individuals who conduct unethical or illegal acts in the name of the enterprise. Today, corporate governance is committed towards improved ethical behaviours in order to realize high profits and operate successfully also sustain growth; the corporate boards must incorporate the new dimension into their core decision making processes.