2. <The Need for Trust>
<1. Owners and others are misled or lied to.
2. Secrets are concealed not for honorable commercial
motives but out of share or for the personal
protection of guilty individuals.
3. Companies engage in behavior that ethical
individuals would consider to be unethical.>
<Need for Trust>
3. <The Need for Trust>
<1. Tightening the legal restriction on directions and on
the company itself.
2. Setting rules concerning the issues of shares and
the payments of dividends.
3. Requiring financial statements to undergo an audit
by an independent auditor.>
<Reasons for Various Companies Act>
4. <The Need for Trust>
<4. Setting the rules for minimum capital requirements
for public companies.
5. Regulating the content of accounts, increasing
accounting, disclosure, the requirements for accounts
preparation and the records to be kept.>
<Reasons for Various Companies Act (Cont.)>
5. <The Need for Trust>
<1. Managers and shareholders are not the same.
2. Managers who fail may not lose as much as
investors who may have committed a considerable
portion of their personal wealth to what they
considered to be safe investment.>
<Limited Liability>
6. <The Need for Trust>
<3. Creditors of banks are often ordinary people who
put their money into those institutions trusting that
they can get it back.>
<Limited Liability (Cont.)>
8. <The Need for Trust>
<1. Govern the level of the monitoring mechanisms
principals need to create an overview of their agents’
activities.
2. Decide the extent to which agents’ compensation
levels are considered to be acceptable by the agent,
even if they considered excessive by the principal.>
<Agency Theory (Cont.)>
9. <The Need for Trust>
<1. Take risk in order to maximize short term
advantage.
2. Adopt aggressive accounting practices that may, in
extreme cases, amount to fraudulent manipulation of
the figures.>
<Power of Modern Management>
11. <The Need for Trust>
<1. Selflessness: holders of public office should act
solely in terms of the public interest. They should not
do so in order to gain financial or other material
benefits for themselves, their family, or their friends.>
<Public Sector (Cont.)>
12. <The Need for Trust>
<2. Integrity: holders of public office should not place
themselves under any financial or other obligation to
outside individuals or organizations that might seek
to influence them in the performance of their official
duties.>
<Public Sector (Cont.)>
13. <The Need for Trust>
<3. Objectivity: in carrying out public business,
including making public appointments, awarding
contracts, or recommending individuals for rewards
and benefits, holders of public office should make
choices on merit.>
<Public Sector (Cont.)>
14. <The Need for Trust>
<4. Accountability: holders of public office are
accountable for their decisions and actions to the
public and must submit themselves to whatever
scrutiny is appropriate to their office.>
<Public Sector (Cont.)>
16. Week 1<CH1>: <The Need for Trust>
< Shareholder and shareholder mapping>;
<https://www.youtube.com/watch?v=gc55hPIFW8w
>; <05th March 2018>
<Online Instructional Videos>
17. Sum Up
This can help set up a comprehension of the
contrasts among owners and supervisors
and the difficulties that those distinctions
cause.
Editor's Notes
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