Take home exam for law and ethics Essay Example | Topics and Well Written Essays - 1750 words

Take home exam for law and ethics - Essay Example It is in this respect wherein the concept of the best practices in corporate governance emerged. An important element that constitutes best practices in corporate governance is transparency. This can be in the form of disclosure, which most capital markets require from its listed companies. What is recommended here is for such corporate policy to be codified as part of the organization’s rules and regulations. For example, Berghe wrote that majority of best practices in corporate governance in the area of transparency is the explicit rule in the code that financial performance, including the related interests of the members of the board should be reported in the annual report to shareholders.1 In addition to the disclosure of the financial reports, best practices mandate that other pertinent information should also be made available, including, but not limited to, instances of share ownership and voting rights. The names of the board members, managers (including their compensation) should not remain hidden as well. The significance of these variables variable has been demonstrated in the bankruptcy of Enron. It was only during the intense media and government scrutiny after the company announced its financial woes that the exorbitant compensation packages of its executives were revealed along with its â€Å"creative† accounting practices. Certainly, the importance of disclosure in corporate governance is particularly highlighted during crises. If full transparency is ensured, audit, performance evaluations, and other assessments and mechanisms can function properly in order to ensure that the organization is on track in achieving its objectives and compatible with sound corporate governance. Another component of best practices is the explicit rule in a corporate code of best practices to establish ethical and corporate governance standards. A number of stock