Gerente, Aldrin P. Oct.

21,2020
2BSA-3 Mr. Escoses
GOVERNANCE, BUSINESS ETHICS, SOCIAL RESPONSIBILITY AND INTERNAL
CONTROL

Chapter 1 (Exercise)

1. Define corporate governance.

- In the business context, it refers to the system of rules, practices, and
processes by which companies are governed. It is all about controlling one’s
business and so is relevant for all organizations.

2. What does corporate governance structure involve?

- The structure of corporate governance determines the distribution of rights
and responsibilities between the different parties in the organization and sets
the decision-making rules and procedures. It is usually up to the management
board to decide how the company will develop.

3. State the purpose of corporate governance?

- The purpose of corporate governance is to help build an environment of trust,
transparency and accountability necessary for fostering long-term investment,
financial stability and business integrity, thereby supporting stronger growth
and more inclusive societies.

4. Explain the basic objectives of corporate governance.

a. Transparency and Full Disclosure

- It ensures that the organization will have a high degree of transparency
by encouraging full disclosure of transactions in company accounts.
b. Increase Shareholder’s Wealth
- Its main objective is to protect the long-term interest of shareholders.
This only reflects that positive perception of corporate governance will
make potential investors to invest in a company or an organization.
c. Self-Assessment
- It enables firms to assess their behavior and actions before they are
scrutinized by regulatory agencies. Having a strong corporate
governance system will limit an organization from exposure of
regulatory risks and fines.
d. Fair and Equitable Treatment of Shareholders
- It ensures equitable and fair treatment of all shareholders of the
company. The equity will be safeguarded by good governance
structure in an organization.

5. Explain the three basic principles of effective good governance.

a. Transparency and Full Disclosure

- Companies that have an effective corporate governance structure in
place know that transparency must be a core principle. Also, the
 organization must have sound disclosure policies/practices and must
safeguard integrity in financial reporting.
b. Accountability
- Good corporate governance ensures stakeholders know that the
company’s mission, values, short and long-term strategic goals must
be accomplished for the benefit of the company.
c. Corporate Control
- It ensures that an organization must recognize some risks and
remunerate fairly and responsibly.

Explain whether the following statement is true or false.

“Responsiveness usually results to effectiveness and efficiency”

- In my opinion, I think this statement is TRUE. It is true that responsiveness

usually results effectiveness and efficiency. The responsiveness of
stakeholders is important in order to do our objectives that will make the
company even better. And with that, those objectives will lead into good,
effective and efficient outcomes.