The Importance of the Ethics of Governance Regime for the Corporation and the Connection to Corporate Governance Practice

Abstract

The purpose of this general review is to enhance understanding of the importance of a corporation’s whole ethics of governance regime and the connection to governance practices. This connection is often missing from corporate governance discussion. There is need for better business community awareness of a well-developed ethics of governance regime guiding appropriate board structure and composition choices subject to firm age and size, understanding of how these choices evolve as the firm matures and grows, plus the benefits from more emphasis in this area for company director training and development. This paper synthesises the theoretical and empirical insight from the ethics and corporate governance literatures to give guidance on best practice for large, medium size and small stock exchange listed companies. This synthesis of the literature evidences that the preferred Australian Institute of Company Directors agency theory prescription for a corporate board is not always optimal. In terms of practical implications advice is given on sound choices on board composition, director selection, plus director training and development that will give the best probability of effective board decisions and strong firm performance – this is not ‘one size fits all’ corporations advice. Future research should focus on whole ethics of governance regimes and governance practices in place for companies that have succeeded compared with companies that have failed. This will improve understanding in this area. This is a substantial future research agenda item as deeper knowledge of this contrast may add significantly to understanding of corporate success and failure.

Citation

O’Shannassy, T. (2015), "The Importance of the Ethics of Governance Regime for the Corporation and the Connection to Corporate Governance Practice", The Ethical Contribution of Organizations to Society (Research in Ethical Issues in Organizations, Vol. 14), Emerald Group Publishing Limited, Leeds, pp. 41-55. https://doi.org/10.1108/S1529-209620150000014002