The law, stakeholders and ethics: Their role in corporate governance

What the paper says

This article examines that core element of corporate governance, the law. It also analyses other aspects of corporate governance: stakeholder management and business ethics and how these relate to the law. Directors are already required by the law to consider the key stakeholders, the shareholders. Business operations require consideration of other stakeholders: employees, creditors and consumers. The infusion of business ethics into corporate governance assists legal compliance. There are many ethical principles embedded in the law. Business ethics and the law are not mutually exclusive. The global financial crisis reminds us that corporate governance requires adherence to both the law and business ethics. The purpose of this article is to take a broader view of corporate governance beyond the core legal duties of directors. It is argued here that consideration of stakeholders and business ethics improves the corporate governance template. The article concludes that better corporate governance will diminish corporate power abuse and further protect stakeholders and the community.