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MGT 239

Business Ethics and Corporate Governance

TU BBA · Semester 7 · BBA curriculum effective from 2021

Requirement
required
Credits
3
Questions
22 questions

Chapter-wise questions

22 past questions across 8 units

Open a chapter to study questions grouped by unit and syllabus topic, with step-by-step solutions.

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Unit 1: Introduction to Business Ethics and Corporate Governance

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  1. Asked on 2025 Exam[2 marks]2025 paper

    Show the similarity between business ethics and corporate governance.

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    Similarity Between Business Ethics and Corporate Governance

    Both business ethics and corporate governance share fundamental normative objectives aimed at sustaining organizational integrity and public trust:

    1. Shared Foundation of Core Values: Both systems are anchored on the core principles of fairness, accountability, transparency, and responsibility (FATR) toward all enterprise stakeholders.
    2. Value Preservation and Risk Mitigation: Both frameworks seek to prevent opportunistic executive misconduct, fraud, conflicts of interest, and agency problems, thereby safeguarding long-term shareholder value and societal welfare.
  2. Asked on 2025 Exam[2 marks]2025 paper

    Mention two differences between ethics and law.

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    Two Differences Between Ethics and Law

    Dimension Law Ethics
    Source & Enforcement Formally codified and enacted by state legislative bodies; enforced coercively through courts, police, fines, and penal sanctions. Derived from moral values, social norms, and personal conscience; self-governed internally without statutory penal enforcement.
    Scope & Minimum Standard Represents the minimum moral threshold accepted by society (what must be done under sanction). Represents an aspirational ideal of moral excellence (what ought to be done for justice and fairness).
  3. Asked on 2025 Exam[10 marks]2025 paper

    Business ethics and corporate governance seems similar but in essence, they are different. Discuss.

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    Business Ethics and Corporate Governance: Conceptual Interdependence and Essential Distinctions

    Introduction

    While frequently used interchangeably in corporate discourse, business ethics and corporate governance represent distinct yet mutually reinforcing pillars of organizational life. Business ethics provides the moral compass that shapes individual decision-making, whereas corporate governance provides the institutional architecture, legal mechanisms, and structural checks that direct and control the enterprise.

    1. Key Conceptual Distinctions

    Dimension Business Ethics Corporate Governance
    Core Nature A philosophical and behavioral discipline focused on moral principles of right vs. wrong. A formal structural, procedural, and legal system of corporate direction, control, and accountability.
    Primary Level of Analysis Micro and Meso Level: Individual managers, employees, and team behavioral norms. Macro Level: Board of Directors, executive committees, shareholders, and statutory regulators.
    Operational Instruments Value statements, codes of ethics, ethical leadership, organizational culture, moral reflection. Board charters, committee mandates (Audit, Nomination, Risk), voting rights, regulatory compliance disclosures.
    Enforcement Mechanism Internalized conscience, peer social norms, informal organizational sanctions, self-discipline. Legal statutory sanctions (Company Act, SEBON, NRB rules), judicial lawsuits, stock exchange delisting.
    Primary Focus The moral quality of decisions and their human impact on all stakeholders. Fiduciary stewardship, alignment of managerial incentives with owner interests, and risk control.

    2. Points of Interdependence: Why One Cannot Survive Without the Other

    1. Governance Without Ethics Becomes a Hollow Compliance Ritual:

      • A corporation may possess flawless governance paperwork—independent committees, detailed audit manuals, and written whistleblower policies—yet collapse into catastrophic failure if executive leadership lacks moral integrity.
      • Classic Example: Enron possessed an award-winning 64-page code of ethics and independent board members, yet executives created fraudulent off-balance-sheet Special Purpose Entities (SPEs) because the ethical culture was rotten.

    2. Ethics Without Governance Lacks Institutional Durability:

      • High personal morality among individual executives cannot protect an organization from systemic fraud, rogue trading, or conflicts of interest unless reinforced by formal governance architectures (dual signature authorizations, internal audit oversight, independent board reviews).

    3. Conclusion and Practical Implication

    In essence, business ethics is the soul and character of an organization, while corporate governance is its skeleton and nervous system. Sustainable corporate success in modern competitive markets requires seamlessly embedding moral principles directly into the formal governance structures of the boardroom.