Directors’ Fiduciary Duties to Perform in the Best Interest of the Companies: An Inter-Related Relationship Between Ethics and Governance

Suraiya Ishak, Ahmad Raflis Che Omar, Azhar Ahmad

Abstract


This study inspires from Smith Moral Sentiment Theory which recognizes moral as the essential motive for every human action. The purpose of this study is to prove the relationship between ethical principle and corporate governance. This study employs case-study approach comprising three Malaysian cases. Each case will be analyzed parallel to the governance principle of promoting the best interest for the company. Board of directors (BOD) is emphasized throughout this study due to the important role of BOD in the structure of corporate governance. This study suggests that in order to execute corporate governance effectively, it must be based on ethical principles. As a result, ethical principles are included in the corporate governance rules as reflected by the terms of “proper purpose”, “in good faith in the best interest of the company”, “reasonable care” and “diligence”. These terms contain subjective and relative meaning. For this study, corporate governance rule cannot be separated from the confinement pillars of ethical principles. Thus, the study reiterates Smith argument that moral sentiment should underly human economic activities, including the jurisdiction of corporate management.

Key words: Ethics; Corporate governance; Agency theory; Moral sentiment; Board of directors


Keywords


Ethics; Corporate governance; Agency theory; Moral sentiment; Board of directors

Full Text:

PDF


DOI: http://dx.doi.org/10.3968%2Fj.ibm.1923842820110301.098

Refbacks

  • There are currently no refbacks.


Reminder

How to do online submission to another Journal?

If you have already registered in Journal A, then how can you submit another article to Journal B? It takes two steps to make it happen:

1. Register yourself in Journal B as an Author

Find the journal you want to submit to in CATEGORIES, click on “VIEW JOURNAL”, “Online Submissions”, “GO TO LOGIN” and “Edit My Profile”. Check “Author” on the “Edit Profile” page, then “Save”.

2. Submission

Go to “User Home”, and click on “Author” under the name of Journal B. You may start a New Submission by clicking on “CLICK HERE”.


We only use three mailboxes as follows to deal with issues about paper acceptance, payment and submission of electronic versions of our journals to databases: caooc@hotmail.com; ibm@cscanada.net; ibm@cscanada.org

Copyright © 2010 Canadian Research & Development Centre of Sciences and Cultures
Address: 730, 77e AV, Laval, Quebec, H7V 4A8, Canada

Telephone: 1-514-558 6138
Http://www.cscanada.net
Http://www.cscanada.org
E-mail:caooc@hotmail.com