This Assignment is about the ethics of corporate governance of Bangladesh. Here in this assignment some common Corporate Governance theories are also evaluated. In Bangladesh what ethics are followed rigidly by the corporations of Bangladesh are also focused.

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Assignment 2:
“The Ethics of Corporate Governance: Bangladesh Perspective”
Submitted To:
Dr. SWAPAN KUMAR BALA
PROFESSOR
Department of Accounting & Information Systems
University of Dhaka
Submitted By:
Anamika Hore
ID: 22-015
Section: C
Batch : 22nd
Course : 6102
Date of Submission:
30/09/2020

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Table of Contents
1.0 Introduction.......................................................................................................................... 3
2.0 Concept of the Ethics of Corporate Governance ................................................................. 3
3.0 Ethical Assumption under Various Corporate Governance Theories .................................. 4
4.0 Ethical Frameworks of Corporate Governance: Shareholder Value vs. Strategic Value .... 6
5.0 Ethical Problems of Corporate Governance in Bangladesh................................................. 8
6.0 Conclusion ......................................................................................................................... 10
References..................................................................................................................................... 11

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1.0 Introduction
Corporate Governance here in Bangladesh has started to increase receiving attention from the
regulatory bodies and practitioners worldwide since the early 1990s. The term Corporate
Governance stands for the accumulation of all rules and regulations through which companies are
regulated and controlled by its management bodies in order to providing the best interest of all the
stakeholders of a company(Corporate Governance Update, 2002). Transparency and deadline meets
of financial reporting of a company also ensured by its Corporate Governance.
Though Bangladesh is trying hard for ensuring good corporate governance practices and ethical
issues related to this practices since its independence but due to the tremendous unstable condition
of political practices and other hostile socio cultural issues creating a great hindrance in the way
of practicing ethical Corporate Governance practices here. The main objective of this assignment
is to draw a vivid pictorial view of the state of the ethics of Corporate Governance practices in
Bangladesh.
2.0 Concept of the Ethics of Corporate Governance
Ethics is may be the best way through which one can translate, decode and work upon themselves
based on right or wrong, honesty or offence, acceptable or avoidable. As defined by Wallace et al
,1999 “Ethics may be thought of as a form of moral philosophy – the systematic study of moral
rules, principles, obligations, agreement, values and norms.” By corporate governance we mean
the accumulation of all the norms and regulations which should strictly be followed by every
organization (Bonn and Fisher, 2005).
“If a country does not have a reputation for strong corporate governance practices, capital will
flow elsewhere. If investors are not confident with the level of disclosure, capital will flow
elsewhere. If a country opts for lax accounting and reporting standards, capital will flow elsewhere.
All enterprises in that country suffer the consequences.” – Arthur Levitt (former chairman of the
US Securities and Exchange Commission). Therefore a strong and ethical corporate governance
structure is the buzz word in the business circle today.
Ethics of Corporate Governance is really an unavoidable element for the success of a business or
company. Above all ethical corporate governance is considered as the blueprint of efficiency of a
corporation in this 21st century.

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3.0 Ethical Assumption under Various Corporate Governance
Theories
Now a days separated management body and ownership is a common culture in almost every
companies according to corporate governance of this country as likely the other countries of the
world. Therefore the organogram of those corporations naturally become more sophisticated and
complex that the must following rules and responsibilities are become harder and sometimes
conflicts occurs (stated in Agency Theory). And it is becoming also difficult to balance various
types of goals and strategies of an organizations in order to maintaining the interests of different
related parties (stated in stakeholders’ theory). The other Corporate Governance theories mainly
are separated by two categories those are: Comprehensive Theories and Restrictive Theories.
Comprehensive theory mainly deals with mass problems when Restrictive theories focus on a
specific party’s issues. Following image are describing the belonging theories of these two.
Figure 1: Corporate Governance Theories
With abreast of time various types of ethical assumptions are developed under different types of
theories related to corporate governance. At the time of last quarter of 2015 the emission scandal
of Volkswagen Thrust the importance ethical assumptions under various corporate governance
theory came in the spotlight. This issue make it completely clear that as in the global economic

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environment contains several types of companies as well as a sundry broad range of stakeholders
so that a one-size-fits all approach or ethical assumptions are not applicable for the modern world
corporations.
In the following discussion some ethical assumption under various corporate governance theories
are focused.
Restrictive Theories:
1) Stewardship Theory: Maintain or focusing on opportunistic attitudes towards the
stakeholders except managers who are involved in the boundary of some manipulated
information or whose contracts are partly completed.
2) Managerial Hegemony Theory: According to the ethical assumption of Managerial
Hegemony theory an organization have to identify the autocratic role of the managers and
tiny roles of boards as the result of following of these company’s towards the expectations
or to the ‘silent consent’ of the outside stakeholders and the proviso accepted inside that
specific institutional environment.
3) Resource Dependency Theory: This theory’s ethical assumption focus on the utility and
essentiality of maintaining the standard of the unique assets and wealth of the institution
(also the governance body are also included) in order to specifying the effectiveness of the
cooperation process and the organization’s connection with the condition of the business.
4) Institutional Theories:
i. Transaction Cost: This ethical assumption under the Institutional Theory
transaction cost is considered as a measurement tool of the usefulness of the
process of coordination inside a company.
ii. Property Rights: This assumption is created for identifying the most appropriate
process of distribution of the rights of the resources of a business in order to
creating an adoptable deduction in the cost of transaction.
iii. Assumption of Contracts: under this assumption we define or take a contract as
an effective way which can stop the information ambiguousness or manipulation
of information and minimizing the opportunism culture among the managers of
an institutions.

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Comprehensive Theories
All of the comprehensive theories, such as political theory, cultural theory, law and
financial theory, behavioral theories, ethical theories etc. assume that an instate can be
defined as the accumulation of rules and norms that is adaptable by law, culture, different
types of socio-political facts which are regulated by the corporate governance bodies. Or
this assumptions also defining every companies as a complex shape of finance and law,
policies, around circumstances so on and so forth issues.
4.0 Ethical Frameworks of Corporate Governance: Shareholder
Value vs. Strategic Value
Only ethics are not sufficient in case of ensuring a good governance in overall organization. So at
present several numbers of business organizations start to develop an ethical framework for its
employees. A framework is highly important to make the morality understanding complete and
easy to the managers and all the stakeholders of an organization. A framework can be called the
right mapping of the principles of a company (Pande and Ansari, 2014).
The Shareholder Model or Framework of Corporate Governance
This model is developed in order to deducting the conflicts between managers’ interest,
shareholders’ interests and also among managers and other stakeholders conflict on the issue of
their interest inside the mechanism of formal or informal corporate governance circumstances.
Mainly this framework can also minimize the consequence agency cost occurred due to
manipulated information transaction between shareholders and managers and also because of the
presence of opportunistic attitude and diversified interests (Charreaux and Desbrieres, 2001).
The result of developing this framework of corporate governance is that it creates a combo for the
formal or informal corporate governance environment which ensures the close checking on the
behavior of managerial bodies. The insider monitoring system of institutions are developed by the
related wings or the law makers. Voting power of shareholders, board of directors’ roles, reciprocal
manager monitoring, render systems, inside trade-union parties or auditing are included and
recognized as substitute way of disciplinary oversight of corporate governance.

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The Regulatory or Legal Framework
According to the Organization for Economic Co-operation and Development (OECD) norms of
corporate governance the essentiality of monitoring, legislator and inspecting bodies for a useful
corporate governance framework. Therefore:-
The corporate Governance Framework can establish a lucid and proficient markets, which is
static in terms of rules and regulations and clearly accumulate the distribution of
responsibilities among the various monitoring, supervisory, legislative agencies. (OECD,
2004)
The OECD rules also instruct that the monitoring or legislator agencies should enjoy the caliber,
fidelity and provision that are important for serving their vested duties in a formal and object
oriented convention. Though it is mandatory that the monitoring of these authorities should always
be punctual, diaphanous, and fully disclosed in a descriptive way.
The Economic Framework
The present economic condition of Bangladesh probably have an important influence on the good
governance. According to this perspective the OECD norms state that:
Corporate Governance is the only portion of broader economic environment in which firms
activities are included for instance the policies based on macroeconomics and the level of
antagonism in commodity and market of factors.
Less accessibility of abroad funding is a familiar phenomenon inside such a country like
Bangladesh with less pecuniary and economic development. Thus the circumstance arise in which
the major shareholders enjoy more privileges and less inspection held by the external authorities.
Therefore the Economic Framework might have an essential influence in corporate governance
practices.
Disclosures of Information and Shareholders’ Right Framework:
This study conclude that in case of three prime sectors the non-financial and financial public
limited companies are more frank towards there shareholders rather than state owned enterprises.
That means the shareholders of public limited companies are enjoying more information exploring
benefits in order to protecting their interest inside the companies rather than state owned
businesses. Inside a state owned enterprises the realm is the principle dominator and also mightiest
one, that’s why they are not much interested to provide even if some important and relevant
information with its shareholders most of the time here in Bangladesh.

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Public Disclosure and Transparency Framework:
On the basis of some common stagnation most of the norms and regulations of allover the world
are developed. Sometimes it can be Fairness, Accountability and Transparency (FAT) or
Responsibility, Accountability, Fairness and Transparency (RAFT). Whatever the base is lucid
presentation is the common phenomenon in both the pillars it is also considered as the prime factor
of every governance. Here in Bangladesh Securities and Exchange Commission (SEC) also
announced that it is compulsory for every listed companies and banks to disclose climacteric
information about the following issues.
a) Selling and purchasing shares by the Directors in their company.
b) Milieu of the directors
c) Any type of renders or stakes of the directors
d) Remuneration paid to the external regulatory bodies.
e) Risk management planning of the company to stakeholders.
The prime purpose of these type of disclosers is to ensure the legality and transparency of the
disclosers towards the shareholders.
5.0 Ethical Problems of Corporate Governance in Bangladesh
The economic development here in Bangladesh is highly scanty among the other countries in the
world. Deficiency of corporate governance creates a great hindrance on the way of the economic
development of this country (Chambers, 2006). Adoption of a good corporate governance
practice culture and implementation of standard CG is mandatory for Bangladeshi companies as
this country set its eyes on becoming a well-known emerging marketplace. “In Bangladesh there
is a certain level of corporate governance, but the question is, to what extent is it applied? The
country has the same challenges the many emerging markets have,” said Philip Armstrong, head
of Global Corporate Governance Form of the International Finance Corporation (IFC).
Following are some pitfalls that create some ethical problems in case of corporate governance in
Bangladesh (M. Shamimul, Syed Zabid and Rashidah, 2014).
1) Conflicts of Interest:
In order to ensuring an ethical corporate governance practice it is a vital point to fudge the
conflicts of interests inside a company. Naturally a confrontment of interest within the
framework of corporate governance take place when any officer or other members from

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controlling body of an organization has other type of monetary interests that straightly
impingement with the purpose of the organization. For instance, if a member of board of a
solar company is the major stock owner of a lubricant company also that is the cause of
fray of interest because, at the time the board he or she are included or serves on
implementing the progress of clean energy then they have a private monetary stake in the
efficiency and godsend of lubricant industry. When this type of fray happens, the
circumstances create a deterioration of the beliefs of the stakeholders on the corporation
permeable to lawsuit.
2) Oversight Issues
The incarnate oversight of Board of Directors on a company’s principles and perspective is an
unavoidable element foe ensuring an abuzz corporate governance. Oversight indicate a vast
terminology that enclose the executive staffs’ reporting towards the board of directors and
consciousness of the directors about the day to day activities of the company and the method
through which its perspective becoming fulfilled. Reserving the interest of shareholders is a
prime responsibility of the directors, they playing a supervision and symmetry role against the
staffs who are intent to violet the rights of stakeholders. Without these oversight in some
Bangladeshi companies executive staffs create various obstacles in the way to meet
shareholders’ interests.
3) Least Accountability
In order to ensuring a fruitful corporate governance system Accountability is a must. From the
uppermost level to the lowest layer of the organogram each layer and group of an organization
should recount and be accountable to another in order to maintaining an accountable check and
balance system. In some cases various divisions of some companies of Bangladesh are fall in
risks because of the poor level of accountability among them and also the whole system of that
company are endangered and lose the shareholders’ faith and their enthusiasm of further
investment
4) Lack of Transparency
For ensuring transparency it is a must for an organization to ensure that it announce their profit
and loses in an exact way and make the relevant information and amounts obtainable for the
investors. Aggregating profits and reduction in loses can seriously hamper the company’s
reputation and connection with stockholders in that they become enticed to invest under

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manipulated presentation. Few Bangladeshi companies are fined by the regulatory agencies for
the lack of the transparency.
5) Ethics Violations
In Bangladesh every members of a corporate body have to serve with some ethical duties in
order to maintaining a discipline in favor of the rights and power of the share owners. Besides
a corporation in Bangladesh also have some ethical responsibilities to conserve the
conventional bonanza of others, including the respective assemblage inside which they
perform. Reducing contamination can be an essential ethical practice for Bangladeshi business
organizations (Rahim and Alam, 2013).
6.0 Conclusion
Corporate Governance are the summation of principles by which the organizations of a country
are operated and regulated. A proper, strong and favorable corporate governance system assure the
security of the democracy and legal power of the inferior or minority share owners of an
organization, symmetric treatment of stockholders, acknowledge the preambles of the share
owners, ensure the lucid and honest manifestation and elucidate the roles and responsibilities of
the respective board of directors. It can be said that corporate governance is a vital element
enhancement and equilibrium of different economic sector of a country (Sivakumar, 2009). While
Bangladesh is making all out endeavor to acquire greater financial and economic prosperity
through enhancing export and industrial foundation of the economy an useful and stable corporate
governance system can create a superior amount of importance for the country for its influence to
facilitate efficient resource allocation and keep the stream of economic growth uninterrupted.
However the documents and legal papers clearly enunciate that the quality and standard of
corporate governance in Bangladesh is holding a dissatisfactory level. Family ownership business,
political instability, want of accountability of public sector, manipulated, partial and inefficient
auditing system and discloser are laying the key role to widespread corruption in the corporate
governance sector in Bangladesh. However, at the conclusion it can be said that the prerequisite
has been taken in order to implementing a sustainable development of the corporate governance
sector in Bangladesh is to ensure accountability, fairness and transparency in the organizations.

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References
1) Corporate Governance, 2002. Corporate Governance Update. 10(1), pp.61-66.
2) Pande, S. and Ansari, V., 2014. A Theoretical Framework for Corporate Governance. Indian
Journal of Corporate Governance, 7(1), pp.56-72.
3) Chambers, R., 2006. Corporate secrecy: the final barrier to corporate governance. International
Journal of Business Governance and Ethics, 2(1/2), p.43.
4) M. Shamimul, H., Syed Zabid, H. and Rashidah, A., 2014. Corporate governance and corporate
accruals: The situation in Bangladesh. AESTIMATIO, 9(2014), pp.90-111.
5) Bonn, I. and Fisher, J., 2005. Corporate Governance and Business Ethics: insights from the
strategic planning experience*. Corporate Governance: An International Review, 13(6), pp.730-
738.
6) Sivakumar, N., 2009. Values‐based corporate governance and organization behavior
– guidelines from Manusmriti for ethical and social responsibility. Corporate
Governance: The international journal of business in society, 9(5), pp.573-585.
7) Charreaux, G. and Desbrieres, P., 2001. Corporate Governance: Stakeholder Value
versus Shareholder Value. SSRN Electronic Journal.
8) Rahim, M. and Alam, S., 2013. Convergence of Corporate Social Responsibility and Corporate
Governance in Weak Economies: The case of Bangladesh. Journal of Business Ethics, 121(4),
pp.607-620.
9) Turnbull, S., 1997. Corporate Governance: Its scope, concerns and theories. Corporate
Governance, 5(4), pp.180-205.
10) Mishra, R. and Rani, D., 2009. Convergence Of Corporate Governance And Business Ethics -
Some Reflections. Indian Journal of Corporate Governance, 2(1), pp.78-89.