Corporate Governance: Ethical Theories, Fraud Triangle, Roles of Chairman and CEO, Martin Shkreli Case, Agency Theory, Stakeholder Theory, Shareholder Theory

Running head: CORPORATE GOVERNANCE
Corporate Governance
Name of the Student
Name of the University
Author Note

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CORPORATE GOVERNANCE
Answer 1
Ethical theories are the governing laws regarding morality and they lay the path as to
what is wrong and what is right. The ethical theories are the principles governing standards of
right and wrong and they denote the basis of human character as well as the obligations that
humans have pertaining to their character and behavior. Just and fair behavior are a mandate that
are guided by the ethical theories. Ethics is about the rights and obligations that have an
individual has in a society and they make the difference between rights and wrong easy to gauge.
The different types of ethical theories are- Teleological Ethical Theory, Deontological Ethical
theory, Virtual Ethical Theory and System Development Ethical Theory (Lucas, Van & Maat,
2016).
Business Ethics is a kind of applied ethics and they help in solving moral dilemmas that
might arise out of a problem. All matters of business conduct are dealt with the help of ethics
(Crane & Matten, 2016). An organization is run by the people who are guided by norms, values
and ethics and these emanate from the codes of business ethics (Lin, Abney & Bekey, 2014).
The ethical theories that apply in analyzing the present case are:
Individualism
This theory is applied in cases when an individual puts his interest ahead of anyone
else’s. This helps in maximizing profit and any method appliedin maximizing profits against the
bounds of law are unethical. The method applied by Shkreli in gaining profit was unethical and
illegal.
Utilitarianism

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CORPORATE GOVERNANCE
This theory states that any decision taken has to be seen in comparison to
other’s happiness and one individual’s happiness is not more valuable or less to anyone else. If
any action causes more harm to others than causing happiness, it shall be considered unethical.
In the case of Martin Shkreli, more harm was caused than happiness, therefore, it was against the
principles of utilitarianism.
Answer 2
The fraud Triangle was formulated by Donald Cressey which explains the
reasoning behind committing fraud and draws a relation between fraud committed and unethical
behavior. Some factors that lead to the fraud triangle are Pressure, Opportunity and
Rationalization (Mansor, 2015). The pressure is an important determinant that acts as trigger.
Opportunity to commit the crime is a necessity because companies that are actively work on
committing fraud are looking for opportunities and chances. Rationalization is the mindset to
commit a crime and earn unethically. Applying the fraud triangle, it can be said that greed played
a major role and that once a fraud starts to be carried out, there is an increase in greed and the
more opportunities he gets, the greedier he becomes. Therefore, the greed make the person
commit the crime and thereafter he loses his power to rationalize.
White collar crime are crimes which are not violent in nature and they are
mostly financially motivated. Both business and government professionals commit this crime
and they have a high social standing (Smith, 2017). Security fraud is committed in the
investment and corporate set up where the investors are induced into making purchases based on
any false information they receive, thereby incurring losses.