TOPIC 1
OVERVIEW OF CORPORATE GOVERNANCE AND ETHICS
QUESTION 1
August 2025 Question Two A
The landscape of corporate governance and ethics is constantly evolving due to emergence of new governance and ethics models.
With reference to this statement, examine FIVE new models of corporate governance.
Click either of the links below to get full book
Answer
Emerging Corporate Governance Models:
- Stakeholder-Oriented Model: This approach expands the focus beyond shareholders to include employees, customers, and communities. It emphasizes sustainable value creation and incorporates ESG considerations and active stakeholder engagement.
- Technology-Driven Governance Model: This model uses tools such as artificial intelligence and data analytics to improve board effectiveness, enhance oversight, and support timely risk monitoring and strategic decision-making.
- Integrated Governance Model: It combines financial and non-financial reporting to provide a comprehensive picture of organisational performance, embedding sustainability into overall strategy.
- Flexible (Adaptive) Governance Model: This model promotes agility, enabling boards to respond quickly to changes and crises through adaptable structures, virtual meetings, and forward-looking planning.
- Ethics and Purpose-Based Model: Here, organisational values and purpose guide governance practices. Ethical conduct is central to decision-making, reinforced by strong leadership at the top.
QUESTION 2
April 2025 Question Four A
Explain FIVE differences between the American model of corporate governance and Japanese model of corporate governance.
Answer
- Board Composition: The American system typically uses a single board with both executive and independent directors, while the Japanese system traditionally features boards dominated by internal executives, sometimes with a two-tier structure.
- Shareholder Role: In the American model, shareholders play a strong and active role in governance. In contrast, Japanese firms have historically limited shareholder influence due to cross-shareholding arrangements.
- Involvement of Financial Institutions: American banks generally maintain a distant relationship with companies, whereas Japanese banks often act as key stakeholders and may participate directly in governance.
- Executive Compensation: Pay in the American system is usually high and linked to performance, especially stock results. In Japan, compensation is lower and focuses more on long-term stability and collective outcomes.
- Stakeholder Emphasis: The American model prioritises shareholder returns, while the Japanese model takes a broader view, giving significant attention to employees, suppliers, and long-term relationships.
QUESTION 3
December 2024 Question Two A
Describe FOUR benefits of effective corporate governance practices to an organisation.
Answer
- Greater Stakeholder Trust: Strong governance builds confidence among investors, employees, and customers, leading to stronger relationships and support.
- Better Financial Outcomes: Organisations with sound governance often achieve improved financial results due to better decisions and risk control.
- Lower Risk Exposure: Effective governance systems help identify and manage risks, reducing legal issues and reputational damage.
- Sustainable Long-Term Growth: By promoting ethical practices and long-term thinking, governance contributes to lasting organisational success.
QUESTION 4
December 2024 Question Five A
Identify THREE principles of professional ethics.
Answer
- Integrity: Acting honestly and consistently with ethical standards in all professional activities.
- Objectivity: Making decisions impartially, free from bias or conflicts of interest.
- Competence and Due Care: Maintaining up-to-date knowledge and applying skills carefully and responsibly in professional work.
QUESTION 5
August 2024 Question Two C
Discuss FOUR differences between “ethics” and “law”.
Answer
- Coverage: Ethics covers a wider range of moral values, while law focuses on formal rules.
- Enforcement: Laws are enforced by authorities, whereas ethics rely on personal responsibility and societal expectations.
- Clarity: Laws are clearly defined and specific, while ethical principles are broader and open to interpretation.
- Outcomes of Violation: Breaking laws leads to legal penalties, while unethical behaviour may result in reputational or social consequences.
QUESTION 6
August 2024 Question Three B
Summarise FIVE benefits a company would acquire by adopting a workplace transparency
Answer
- Higher Employee Morale: Openness builds trust, reduces uncertainty, and promotes fairness.
- Improved Decisions: Access to accurate information helps employees make better choices.
- Greater Productivity: Clear communication minimises confusion and increases efficiency.
- Stronger Workplace Relationships: Transparency enhances trust and teamwork between staff and management.
- Positive Organisational Image: Open practices improve reputation and attract skilled employees.
QUESTION 7
April 2024 Question Three B
Explain FIVE models of corporate governance and ethics.
Answer
- Shareholder-Centred Model: Focuses on maximising returns for shareholders as the main objective.
- Stakeholder Model: Balances the interests of multiple groups, including employees, customers, and the community.
- Agency Theory: Addresses conflicts between owners and managers by aligning their interests through monitoring and incentives.
- Stewardship Theory: Assumes managers act in the organisation’s best interest and promotes trust and empowerment.
- Resource Dependence Theory: Emphasises the board’s role in securing external resources and maintaining important relationships.
QUESTION 8
August 2023 Question Five B
The Organisation for Economic Co-operation and Development (OECD) has immensely contributed in the developing, recording and instilling good corporate governance in business and public operations.
Explain FIVE pillars of corporate governance recommended by OECD.
Answer
- Protection of Shareholder Rights: Ensures shareholders can participate in key decisions and access relevant information.
- Fair Treatment of Shareholders: Promotes equal treatment and protects minority shareholders.
- Effective Board Functioning: Encourages clear responsibilities, accountability, and strong leadership within boards.
- Transparency and Disclosure: Requires accurate and timely reporting of financial and governance information.
- Stakeholder Engagement: Recognises the importance of stakeholders and promotes cooperation between them and the organisation.
QUESTION 9
April 2023 Question Two B
The universality of ethics refers to the belief that certain moral principles are valid and apply universally, regardless of cultural, individual, or historical differences.
With reference to the above statement, explain FIVE principles of universality of ethics.
Answer
- Respect for Human Dignity:
Acknowledges the inherent worth of every individual and promotes fair treatment. - Justice and Fairness:
Supports equal opportunities and opposes discrimination and exploitation. - Honesty and Integrity:
Encourages truthfulness, accountability, and ethical conduct. - Doing Good and Avoiding Harm:
Promotes actions that benefit others while preventing harm. - Autonomy and Informed Choice:
Respects individuals’ rights to make informed decisions about their own lives.
Click either of the links below to get full book
