# Corporate management ethics

Synopsis Corporate boardroom decisions often reflect non-transparent personal agendas by the principal promoter of the matter to be decided. As the covert matter, the subject of such decision, may not be in the stock/shareholders' or indeed the public's best interest, the need for regulated transparency and greater director's accountability is self-evident as it may reduce the risks of corporate misdemeanours and financial misadventures. However, given that the commerciality of free enterprise activities includes the dual tenants of commercial confidentiality as well as the propriety of intellectual property, enforced greater transparency may come at an in-determinant cost. Given this topic's multi-dimensionality (legal, accounting, social and ethical responsibility), a number of detailed discussions are necessary if the full spectrum is to be canvassed.
The Scene Corporate boards of directors are ostensibly composed of two groups, the professional external directors and the working executive directors. While the functions of the external directors are generally well understood, the connections and sources of influence upon such directors is rarely evident to even the diligent investigator. Factors such as loyalties to (past & present) peers,colleagues and social associations, all tend to influence, albeit not necessarily consciously, a person's personal values and actions. Similarly, the desire for ever greater emoluments and rewards is often a uniting factor among otherwise divers views and subjective values. A further factor is the need to exercise personal power or be granted structural power both overtly in the boardroom and covertly through informal discussions. As a whole the board of directors can be viewed as one homogeneous entity directing the affairs of thee corporation. At a greater magnification however, a number of firm and semi-fluid power sub-structures become evident. Moreover, frequently informal connections (past & present) between various external (non-executive) directors and senior executives do exist. Although evident on the face of it, such connections can constitute a two-way conduit through which information and influence can flow. The essence of what is said, to whom and when will only be known if and when communicated to the full board. Furthermore, although directors are appointed by open election, the nomination and proxy processes frequently leave large pre-selection opportunities to be exploited. In this context shareholder blocks can achieve proportional numbers of seats on the board. As such blocks often project specific policy biases, an example most commonly found with institutional shareholders, consensus decisions tend to be derived by negotiation between the various interest blocks.
Discussion of Undue Influence 'If it ain't illegal it must be OK!' The grey area between the strict constructions of the illegal (express & implied)on the one hand, and the legal (regulated, general statute and common law) on the other, considerable scope exists to bend the rules by construing a legitimate intent, overriding expedience or adopting simple careless indifference. However the vicissitude of commercial life allow genuine errors of judgment to remain inevitable. Although we live in times of published corporate governance proclamations, sadly such statements fail to address one aspect of boardroom decision making; those are the matters pertaining to influence exercised by individuals over boardroom decision processes, or offside determinations and pre-agreed arrangements between some of the actors. A dimensional problem arises in this context; namely when is an influence legitimate in the course of examining alternatives and distilling the commercial benefits that might accrue to the corporation, and when is it pernicious by virtue of undesirable consequences to the corporation. Of course this depends on the individual circumstances which, in many cases, invoke issues of personal ethics, fiduciary duty and the scope of corporate governance.
It follows that this discussion topic is significant enough to warrant the specific focus upon an in-depth examination of the undue influenceconcept. Two types of influence could be termed undue. (i) The first class encompasses the exercise of duress, coercion and bribery by one group of persons upon one or several directors, although clearly illegal, is both difficult to detect and in the event even more difficult quantify into actionable terms. These difficulties can be construed as a protective barrier to the prosecution of such illicit conduct.
(ii) The second class of undue influence encompasses the various forms of inducement constituting indirect future opportunities, status and non-monitory rewards. This latter form is often applies to executive directors and senior executives. In contrast to the former illicit activities, these latter ones are almost impossible to substantiate as illicit, yet they clearly constitute, it is suggested, at best questionable conduct and possibly undue influence by one or more members of the board. To reapply the previous simile, the extreme difficulty of substantiating an actionable case constitute a protective barrier to the prosecution of such possibly illicit conduct.
These barriers to compel ethical conduct by directors with respect to the actual, as distinct from the nominal, board room decision processes seem even more substantial in this latter class. The difficulties are both evidentiary and procedural. Procedural impediments such as regulatory clausing limitations, the difficulties in collecting hard and corroborating evidence and the capacity to fund litigation on the one hand, and the
Dr.King 09:20, 11 September 2009 (UTC),