How Principles of Business Ethics Relates to Corporate Governance and Directors?

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Abstract

How can we define business ethics? Which principles are inherent in it? Business ethics propose several principles to be considered by companies, commercial entities, as well as other entities such as NGO’s, cooperatives, public organizations etc. First, this study will clarify the meaning and scope of business ethics and the principles included, such as integrity, fairness, trust, openness, truthfulness etc. Secondly, I will try to examine different facets of business ethics. I will approach this concept especially from a legal perspective and try to determine which aspects of this concept have been integrated into law. Business ethics has reflections especially in business law and corporate governance and is being “legalized” by the corporate codes of conduct. This study aims to clarify that business ethics are mentioned explicitly in Turkish law, in the Code of Corporate Governance concerning public companies and discuss legal impact of this regulation. As a result of this quotation in the Turkish Legislation, there could be revealed several questions. One of the questions is whether ethical standards might be a source of liability of the board and directors. In my presentation I would like to examine to what extent ethical standards interrelates with corporate governance codes and the liability of directors. Business ethics can be described as a source concept and a set of principles, that gives rise to fields such as “corporate governance”, “corporate responsibility”, “liability of directors” and “human rights in business” concerning especially working conditions of the employees. Business ethics has an intersection with all the mentioned fields. In the second part of this study, I will try to clarify the connection of business ethics with corporate governance principles in business and then conclude how business ethics has been adopted into legal system and how it shapes and affect business practices especially in Turkish law.

[1] Andrew Crane/Dirk Matten, Business Ethics, fourth edition, Glasgow 2010, p.5-6.

[2] Andrew Crane/Dirk Matten, Questioning the Domain of the Business Ethics Curriculum, Journal of Business Ethics, p.357-369; p.357

[3] Ann K.Buchholtz/Jill A. Brown/ Kareem M. Shabana, Corporate Governance And Corporate Social Responsibility, Chapter 14, in The Oxford Handbook of Corporate Social Responsibility, p.327.

[4] Anna Beckers, Enforcing Corporate Social Responsibility Codes:On Global Self-Regulation and National Private Law, 2015

[5] EU Corporate Governance Plan, “Action Plan: European company law and corporate governance - a modern legal framework for more engaged shareholders and sustainable companies”, 12.12.2012, p.5.

[6] G20/ OECD Principles of Corporate Governance, 2015 version, p.46

[7] G20/ OECD Principles of Corporate Governance, 2015 version, p.47, 50.

[8] Liesbeth F.H. Enneking, Foreign Direct Liability and Beyond, 2012;

[9] Rosamund Thomas, Business Ethics, Chapter 2, in Corporate Social Responsibility:The Corporate Governance of the 21st Century, 2011, p.35-36-37.; Julia Casson, A Review of the Ethical Aspects of Corporate Governance Regulation and Guidance in the EU, London, 2013, p.8.

[10] Rosamund, p.36. The author mentions that corporate governance is a key part of business ethics.

[11] T.L. Beauchamp, / N.E. Bowie, 2004, Ethical Theory and Business., 7th edition, 2004, p.4; Crane/Matten, p.359 para. 2.

[12] Tineke Lambooy, Legal Aspects of Corporate Social Responsibility, 2014, Utrecht Journal of International and European Law 1.

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