Corporate Governance and Ethics
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Corporate Governance and Ethics

An Aristotelian Perspective

Alejo José G. Sison

Corporate Governance and Ethics is an illuminating and practical reading of Aristotle’s Politics for today’s corporate directors. With a deft synthesis of ethics, economics and politics, Alejo Sison elevates the discussion of corporate governance out of the realm of abstract rules and structures into a more effective form of Aristotelian politics. He argues that corporate governance is a human practice where subjective, ethical conditions outweigh the mastery of techniques, since the firm is not a mere production function but, above all, a community of workers. Corporate governance issues are discussed in a holistic fashion, using international case studies to embed the discussion in environments defined by their economic, legal and cultural systems. One of the author’s key messages is that reform starts with the ethical and political education of directors.
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Chapter 2: Corporate Governance by Box Ticking

Alejo José G. Sison


I SARBANES–OXLEY AND ENRON: IS THE REMEDY WORSE THAN THE DISEASE? The Sarbanes–Oxley Act, also known as the Public Company Accounting Reform and Investor Protection Act (Pub.L.No. 107-204, 116 Stat. 745), became effective as United States federal law on 30 July 2002. This law was meant primarily to protect investors by improving the accuracy and reliability of corporate disclosures. At the law’s signing, President George W. Bush affirmed that it contained ‘the most far-reaching reforms of American business practices since the time of Franklin Delano Roosevelt’ (Bush, 2002), in clear allusion to the New Deal of the 1930s. ‘This law says to every dishonest corporate leader: you will be exposed and punished, the era of low standards and false profits is over; no boardroom in America is above or beyond the law’ (Bush, 2002), continued the President with rhetorical flourish. Sarbanes–Oxley consists of 11 sections or titles: one establishes the Public Company Accounting Oversight Board (PCAOB), two specifically create tough criminal penalties for executives committing fraud or issuing misleading information and several more cover areas such as auditor independence, corporate responsibility, financial disclosures, analyst conflicts of interest, and corporate and criminal fraud accountability. Sarbanes–Oxley also updates and amends provisions from the Securities Exchange Act of 1934, the Employee Retirement Income Security Act of 1974 and the Federal Corporate Sentencing Guidelines. Among Sarbanes–Oxley’s major provisions we find the certification of financial reports by chief executive officers and chief financial...

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