Importance of Code of Ethics in Corporate Governance

CORPORATE GOVERNANCE

INTRODUCTION
The Australian Psychological Society (APS) Code Of Ethics instill ethical principles that sets a
defined benchmark for guiding both the psychologists and the general public so as to develop an
understanding about being ethical while practicing profession. Basically, this code is dependent
on three ethical principles:
 Respect for the rights and dignity of people: it defines the respect and dignity that a
civilized person deserves as his right and includes the right considering justice and
autonomy (Atkinson, 2012).
 Propriety: This principle refers to the act of doing good with noble intentions that serves
a feeling of accountability and responsibility to clients, to professional bodies and to the
economy as a whole.
 Integrity : This principle requires a professional to be in his good character as a
professional body puts its trust in all these professionals any kind of misconduct would
directly affect the image and reputation of such statute body itself (Datar, 2015).
Code of Ethics is not just an internal measure for an organization but also serves externally by
reflecting its values and commitments as a corporate towards the society. It helps in clarifying
the mission, principles and values of an organization. A well framed code of ethics defines a
required professional behavior that an entity seeks to instill in its leaders and all other employees
working under it. As a result, such ethical principles act as a benchmark against which the
performances of such entities and individuals are measured.
Actually, such a code acts as a guidance framework that instructs a professional to take decisions
and act in their professional competence. The existence of code works as a body that
professionals refer to sort out their ethical dilemmas. It is also referred to as a valuable document
adopted within a business structure (Girard, 2014).

CORPORATE FAILURE
Let us consider certain latest cases where the organizations got into litigations due to not
behaving ethically. Uber, being one of the world's leading private company, got into a litigation
due to its ex-CEO, Travis Kalanick who was charged for not behaving in ethical terms with one
of the uber drivers. He was travelling in uber black where he got into a conversation with the
driver where the driver blamed his strategies that resulted in bankruptcy of such drivers.
However, the CEO reacted ruthlessly and insulted him by using harsh statements (Horngren,
2012). Meanwhile, the conversation was recorded that went viral socially. Thus, the CEO's
action got the company into allegations of not having a code of ethics. The professionalism
norms of the company were blamed and as a result, the investors forced the CEO to resign.
However, the company still doesn't have a clean ethical image and is continuously working
towards adopting a strong ethical code (McLaney & Adril, 2016).
The Royal Commission into misconduct in the Banking, Superannuation and Financial Services
Industry discovered about the ethical misconduct called 'fee for no service'. In this case,
customers were charged fees for financial services that weren't actually provided to them in
actuality. They were charging superannuation fees of which the customers were unaware. There
wasn't a proper provision for financial services provided. A range of hearings are going on for
serving the society unethically. This unethical behavior shook the public confidence and trust in
the companies and the overall banking sector as top big companies were involved in this
litigation such as Commonwealth Bank, Westpac Bank ,etc.