Exploration of Ethics as Moral Substance in the Context of Corporate Governance

Abstract

The Corporate Governance guidelines, rules and regulations were introduced to guide corporations towards good governance practices. However, there seem to be contradicting events that projected otherwise. The series of corporate scandals seems to be giving the impression that there is something lacking in the present corporation governance practices among the corporations, in particular, the public listed companies. Several opinions were gathered in answering this lacuna and the outcome seems to pin point to the lack of moral element in the present corporate governance practices. Thus, this study attempts to explore ethics aspects as a moral substance in relation to corporate governance. Guided by the subjectivity of the research issue, the qualitative approach was used to investigate the subject matter. Specifically, purposive sampling was used. The study found various ways to embed ethics in promoting morality in corporate governance practices among the corporations in the study. The ethical content developed in the corporations guide the corporate business practices, and, hence, motivates good governance, i.e. accountability, responsiveness, responsibility and transparency. Ethical principle, ethical position and ethical structures are the three main elements of ethics that emerged from the analysis of the research data that drive the corporations towards inclusive governance practices. In addition, process of integrating morality in governance is also part of the initiatives able to guide towards good governance. Overall, the study described a new scope of corporate governance framework. The various emergent patterns answered the question ethics is the moral substance that can be incorporated into corporate governance practices. Generalization of the findings would be difficult due to the limitations of the scope, hence an in-depth case study is proposed for future research to generate deeper and rich description of the issue

Business ethics: A connection to good corporate governance implementation

“…Empirical evidence from previous studies has emphasized the important relationship of ethics in corporate governance. Othman & Rahman (2011) prove that ethics plays an important and significant role in corporate governance. They point out that ethical positions (independent bodies and whistleblowers), ethical principles (corporate philosophy) and ethical structure (ethical reporting and code of ethics) are important requirements for governance practices.…”

“…Several previous studies have emphasized the important role of ethics in corporate governance (El-Kassar, Messarra & Elgammal, 2015;Othman & Rahman, 2011;Othman, Rahman & Shamsudin, 2012). In Malaysia, Othman & Rahman (2011) examined the role of ethics in corporate governance.…”

“…Several previous studies have emphasized the important role of ethics in corporate governance (El-Kassar, Messarra & Elgammal, 2015;Othman & Rahman, 2011;Othman, Rahman & Shamsudin, 2012). In Malaysia, Othman & Rahman (2011) examined the role of ethics in corporate governance. The results show that ethical positions, ethical principles, as well as the ethical structure are important requirements for promoting governance practices.…”

Corporate ethical values disclosure: evidence from Malaysian and Indonesian top companies

“…Joseph et al (2019, p. 112) highlighted that ethics principles are “preached but may not be practiced sincerely by professionals and employees.” Therefore, the value of ethics should be embedded into the companies’ culture and embraced by the employees (Abidin et al , 2017). The culture can be embedded internally through employees and externally through the distribution of the companies’ code of ethics to the relevant party (Othman and Rahman, 2010). KPMG (2014) in its survey revealed that the most common factors that contributed to unethical behavior are poor communication of the organization’s values or code of ethics or code of conduct, poor examples shown by senior management and poor ethical culture within the organization, as supported by Abidin et al (2020).…”

“…A study by Zam et al (2014) highlighted that one of the factors that encourage fraud commission is weak ethical culture and poor corporate governance. An earlier study by Othman and Rahman (2010) through interviews with key players of corporate governance in Malaysia and companies revealed that several ethical dimensions such as ethical leadership, integration of ethical culture, and established corporate value stimulate corporate governance practices.…”