2003/wfdsa/hkdr. jaw1. 2003/wfdsa/hkdr. jaw2 corporate governance and ethics: perspectives from...
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2003/WFDSA/HK Dr. Jaw 2
Corporate governance and ethics:
Perspectives from TaiwanProfessor Dr. Yi-Long Jaw
National Taiwan University
Yljaw@mba.ntu.edu.tw
September 29, 2003
2003/WFDSA/HK Dr. Jaw 3
OutlinesOutlines
• Corporate Governance
• Business Ethic
• WFDSA’s Code of Ethics
• Perspectives from Taiwan
2003/WFDSA/HK Dr. Jaw 4
Cases and Lessons (Maximizing whose wealth?)Cases and Lessons (Maximizing whose wealth?)
• Enron, WorldCom, Xerox (USA)
• Kennex,Chung-Hsin Bank, Sunrise Construction Co. (Taiwan)
Misconduct by CEO or chairman of the board (might get away)
Falsified financial statement over years
At the expense of other investors and employees (including management)
Corporate GovernanceCorporate Governance
2003/WFDSA/HK Dr. Jaw 5
new agendanew agenda
• Internal Auditing: whistle blower
• External auditing: accounting firms and CPAs (Certified Public Accountant)
• Independent board directors
Corporate GovernanceCorporate Governance
2003/WFDSA/HK Dr. Jaw 6
Board of directorsBoard of directors
• 2001 Statistics by SFI shows: they held 20% of voting shares in contrast to 55% of seats on board for public companies.
• Newly listed company is encouraged to appoint 2 independent directors and 1 independent supervisor as of 2002/2/22
Corporate GovernanceCorporate Governance
2003/WFDSA/HK Dr. Jaw 7
M. Iskander and N. Chamlou, "Corporate Governance: A Framework for Implementation,“the World Bank, 2002 http://www.worldbank.org/html
/fpd/privatesector/cg/docs/gcgfbooklet.pdf
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Business PerspectivesBusiness Perspectives
• Government Regulation: to prevent or to remedy market failure and governance failure
• Transaction Cost Theory: to organize operations between market or hierarchy
• Agency Theory: to align the goals and behavior between principals and agents
Corporate GovernanceCorporate Governance
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Business DecisionsBusiness Decisions
• Legal requirement market mechanism hierarchy arrangement values
Market mechanism: between firms (rivalries, vertical or horizontal counter parties and partners)
Hierarchy arrangement: branch, affiliate, joint venture, licensing or franchise, contracting
Values for board members and management
Corporate GovernanceCorporate Governance
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Values (looking internally)Values (looking internally)
Corporate culture, pledge, cornerstones
Business Ethics (looking externally)Business Ethics (looking externally)
Social responsibility, codes of conducts, codes of ethics
Values and Business EthicsValues and Business Ethics
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1. Responsibility to customers
2. Responsibility to employees
3. Responsibility to stockholders
4. Responsibility to creditors
5. Responsibility to the environment
6. Responsibility to the community
Ethics and responsibility –Ethics and responsibility – a stakeholder approach a stakeholder approach
2003/WFDSA/HK Dr. Jaw 12
1. Toward consumers
2. Toward direct sellers
3. Between direct sellers and companies
4. How to file a code complaint
5. Code Administrator directory
WFDSA’s Code of Ethics
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Consumer first
Sellers/ Distributors/ Dealers/ Consultants next
Then, market mechanism / competition
Environment: Green business
Community: minorities, retarded, diversity
On WFDSA’s Code of Ethics
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Independent director or supervisor
For public companies and private companies
Rubber stamp or devil’s advocate
Obligations and rights / liabilities
Implementation
Initiatives on committee or research task
Pre-board meeting interaction
Perspectives from Taiwan
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Ethics
To employees
To the countries where we do business
(To the world we live in)
Values
Of Management / Leaders
Integrity, respect for the potentials of others, willingness to help, admiration for success
Perspectives from Taiwan
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