Corporate Governance and Ethical Challenges at General Electric

This report provides a comprehensive analysis of corporate governance and ethical issues within General Electric (GE). It delves into various aspects, including problem identification, the importance of ethics in corporate governance, and the identification of ethical breaches. The report highlights key concerns such as conflicts of interest, transparency, and accountability, supported by extracts from GE's 2020 financial statement. The study examines GE's organizational framework and the independence of executives, as well as ecological, healthcare, and security issues. It also discusses the financial implications of ethical violations, such as settlements related to environmental cleanup and national security breaches. The conclusion emphasizes the significance of robust corporate governance and ethical practices in ensuring a company's financial viability and long-term success.

Managing Through
Finance 1

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Problem identification.................................................................................................................1
Ethics in Corporation Governance and Similar Topics...............................................................2
Analytical evaluation...................................................................................................................3
Extracts from General Electric's 2020 Financial Statement on Ethics Concerns........................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
A company's success or failure is determined by its business management. Policies,
regulations, customers, and procedures all have an impact on how businesses operate (Abdullah
and Foo, 2019). Users and investors benefit from a firm's corporation management practises
being made publicly available. As a result, all businesses desire to be recognised for their
excellent company management, civic engagement, and environmental balance. This
document has a strong emphasis on corporation management, as well as the moral issues that it
raises and what General Electric Company could have undertaken. General Electric Company is
a worldwide technology and finance operations firm. The firm offers a variety of goods and
solutions, including diagnostic picture analysis, retail and commercial finance technology,
freshwater purification, home devices, and aircraft turbines. The company is listed on the New
York Securities Market. There are 4 parts in the study. The next section addresses the company's
moral dilemmas, and the 3rd and concluding section completes the analysis. The study's
conclusions are supported by references to books, periodicals, and corporate authorities.
MAIN BODY
Problem identification
General Electric Company's Corporation Governance and Ethical Issues- Distinction
amongst a panel and a company has been more and more common in current decades. The
conflicts of interest among administration and shareholders was among the factors. Numerous
authors have attempted to describe the term as a collection of guidelines, rules, and procedures
intended to guide and manage an organisation. Whenever it relates to corporation governance,
the decision-makers as well as those with supervision obligations are all identified. The
procedures used to operate, regulate, and administer firms are described in The Magazine of
Tourism and Commercial Administration (Beck, Frost and Jones, 2018). Numerous interior and
exterior variables have an effect on users' objectives. Corporation administration is the alignment
of the ideals and goals of individuals that administer the company and people who fund it, with
the goal of minimising management immoral behaviour whilst allowing shareholders to feel
somewhat assured about the risks associated with their investments. The company uses both
interior and exterior management structures, dependent on the industries it serves. The 4
elements of corporate governance—people, procedures, objectives, and results—create a

framework for the organisation's existence and behaviour. Corporation governance is required as
soon as a company has the procedures and frameworks in place to ensure that the interests of all
stakeholders are taken into account. A firm's longer run prosperity is ensured by effective
corporation management, that often produces corporate concepts.
A firm's risk managerial scheme, procedures for resolving conflicts of involvement,
executive remuneration structures, methods for disclosing, statutes and civic obligations, and the
firm's referendum of stockholder worries should all be assessed in order to determine whether it
has been perfecting efficient organisational leadership. On either hand, poor corporation
governance procedures comprise the accompanying:
 Corporation governance includes everything from worker welfare to risk administration
to ecological effect to addressing immoral conduct to compensation. Strong corporation
governance demands that choices be made in the company's finest interests as a whole in
order to be successful (Chen and Komal, 2018).
 Finance reports that are fraudulent and non-compliant are published as a consequence of
insufficient communication with accountants and potentially poor advisor selection.
 Absence of monetary rewards could prevent a company from attracting and keeping
excellent talent. The capacity of investors to oust an incumbents from administration gets
progressively challenging if the company is poorly administered.
Ethics in Corporation Governance and Similar Topics
 Transparency- Reliability and accessibility in the finance sector entail the full and
transparent presentation of all pertinent monetary information. A business runs the danger
of irreparably harming its ties with its clients if it misrepresents its fiscal outcomes to
owners or creditors. Officials could impose additional, significant penalties as a
consequence.
 Ethical Offense- The boards of governors of every firm has an obligation to behave in
the greatest benefit of the investors. Additionally, there is a duty to the general
community and to the welfare of others. Environmental protection must be joint effort
between moral, societal, and corporate governance standards, and nations that do not
uphold such standards must be avoided (Dong, Liao and Zhang, 2018).
 Conflicts of Interests- It is crucial to reduce apparent conflicts of interests to a minimal.
Conflicts of interest are consequently deemed to occur in the context of corporation

governance whenever a governing participant's engagement in monetary transactions or
individual objectives conflicts or obstructs the corporation's objectives. Whenever
someone sits on the boards of an oil business and another individual is on the boards of a
photovoltaic proposal, there are conflicts of interest since respective monetary objectives
are so comparable. A situation like this could cause investors to develop confidence in
the company, which could conclude in legal action.
 Concerns with supervision- It's critical to keep a check on a corporation's policies and
procedures to make sure they're working properly. Representatives of the executive group
should update the boards on the corporation's business activities in an attempt to do this.
This safeguards the concerns of the investors while acting as a checking and balance
mechanism for the executive group. It's a preventative measure preventing possible legal
infractions which can incur hefty consequences.
 Accountability Concerns: Strong management is a requirement for successful
corporation governance. Frequent monitoring provides security, and responsibility needs
to go all the way down the chain. Owing to problems which have surfaced in a section of
the business which might affect the overall enterprise, a loss of visibility can lead to a
scenario wherein shareholders try to liquidate their holdings (Husna and Satria, 2019).
Analytical evaluation
Business ethics at General Electric and associated concerns worldwide electricity services
are provided by the multi-divisional company General Electric. Sustainable energies, oil & gas,
medicines, transportation, and power generation are some of the firm's major divisions. The
company has been managed to withstand the uncertainties and come out on top thanks to its
broad operations. Employing General Electric's organisational framework, activities and fiscal
results are evaluated and managed.
Governing Framework: The council of governors for General Electric has 11 individuals,
comprising 10 independents and one additional person. Autonomous members are expected to
visit at least 2 General Electric companies sans first contacting company administration.
Whenever it relates to corporate governance, each company follows a collection of fundamental
principles and concepts which shape things from the composition of the council of governors to
productivity evaluations. The General Electric Company's 2020 Financial Statement expresses
the ethics issues expressed.

Executives' autonomy: A major proportion of the boards would be autonomous since
autonomy is determined by the company depending on the guidelines provided. All non-
management governors would be independent contractors. General Electric seeks to retain a
baseline of 10 autonomous individuals at all instances, with at least two-thirds of the
individuals remaining autonomous as determined by the council of directors in accordance with
the guidelines provided (Madan and Chadha, 2019). Directors that may not match General
Electric's independent requirements nevertheless bring important expertise and insights to the
panel and the business. To be deemed autonomous, a member should have no immediate or
tangential financial connection to General Electric, according to the panel. The committee has
established standards for evaluating member autonomy which are either similar to or stricter than
that of the standards for New York Securities Market registration. In accordance to such criteria,
the panel would consider all pertinent information and situations when determining an autonomy
assessment.
 A manager won't be considered autonomous if, at the moment the decision of autonomy
is made, the supervisor is an executive official or worker, or an immediate relatives
representative is an executive official, of some other corporation that is obligated to
General Electric or to something which General Electric is obligated, and the aggregate
quantity of every corporation's liabilities to the other at the conclusion of the prior
financial year is greater than 2% of a different corporation's overall aggregated holdings.
 A director won't be considered autonomous if:
o The director is employed by General Electric, or a relative of the director's close
relatives is an employee of General Electric (Mongwe and Malan, 2020).
o The director does not receive any immediate payment from General Electric apart
from board and panel charges, retirement benefits, or other types of employee
payment for prior work (provided that certain remuneration is not conditional in any
way on continued employment).
o General Electric directly compensates a person of their close relatives with more than
$120,000 annually.
o A representative of the director's close relatives is currently a partnership of General
Electric's autonomous accountant, or a relative of the director's parents and siblings is

connected to or hired by General Electric's autonomous accountant and directly
working on or has engaged on General Electric's inspection.
Extracts from General Electric's 2020 Financial Statement on Ethics Concerns
Ecological, healthcare, and security issues- These entailed accepting ecologic restoration
and nuclear outage duties in addition to subjecting personnel to chemicals and other potentially
hazardous materials. It is known that asbestos could lead to disease in people. After being
swallowed, asbestos particles could be deposited and gather in the chest, perhaps causing a
disease which is fatal or extremely chronic (Oussii and Taktak, 2018). As per the corporation, it's
likely that they exceeded their spending. The company has been charged for $2.484 billion in
2019 and $2.569 billion in 2020, correspondingly, for charges relating to employee exposures,
ecological cleanup, and nuclear dismantling. The firm had already arranged a multimillion-dollar
remedial deal with the environmental protection agency to remediate out the Massachusetts
Housatonic River, based on its financial statement for 2020. To placed this into perspective, the
costs of remedial task, reprocessing, and employee exposed are anticipated to be $247 million,
$236 million, and $214 million, in both, in 2019 and 2018. This illustrates how moral violations,
like a complete absence of understanding about the ecosystem and socioeconomic wellbeing
between many their staff, have a significant monetary effect. This sort of event is anticipated to
happen. A settlement to resolve allegations of breaches of national security act was disclosed by
General Electric and the Services and Trading Committee on December 9, 2020. An ethics rule
which was also violated in this examination was accountability. In order to make amends for the
breach of national security regulations that was detailed in the company's 2020 financial
statement, it consented to settle a criminal fine of $200 million. It was discovered that offenders
fabricated information concerning General Electric's Energy and Finance businesses between
2015 and 2017. In 2020 General Electric's violation of the SEC's ruling, General
Electric presented its General Electric Energy profitability sans disclosing that almost 50% of the
reductions in the initial 3 quarters of 2017 and one-quarter of revenues in 2016 resulted from
reduced expense forecasts.
This specific lawsuit agreement serves as an example of how expensive moral concerns in
corporate governance could be. The firm claims that in order to avoid this, it has strengthened
corporate procedures and increased the accessibility and accessibility of its authority, insured
patterns, and dangers (Zeller, Kostolansky and Bozoudis, 2019).

CONCLUSION
This report's goal is to look into corporate morals and accountability in relation to General
Electric Corporation, a corporation that is listed on the New York Securities Market. Given that
corporate governance encompasses all of the various laws, rules, and practises used to oversee
businesses, its significance cannot be overstated. A firm's ethics commercial operations and
fiscal viability are validated by a strong and well-finished interior and exterior corporation
governance system. On either side, a malfunctioning panel of executives is a recipe for disaster
since wrongdoing including fabricating income reports and a disorganised corporate structure
may result in bankruptcy and possibly conflict. Disputes of interests, responsibility, openness,
and ethical transgressions were all covered in the corporate governance investigation. Based on
its 2020 financial statement, General Electric had to spend a sizable sum of cash to make up for
breaching 2 of the requirements established for company.

REFERENCES
Books and journals
Abdullah, L.A. and Foo, S.C., 2019, April. HSSE Elements in Social Risk Assessment: An
Integrated Approach in Managing Social Risks. In SPE Symposium: Asia Pacific
Health, Safety, Security, Environment and Social Responsibility. OnePetro.
Beck, C., Frost, G. and Jones, S., 2018. CSR disclosure and financial performance revisited: A
cross-country analysis. Australian Journal of Management, 43(4), pp.517-537.
Chen, S. and Komal, B., 2018. Audit committee financial expertise and earnings quality: A meta-
analysis. Journal of Business Research, 84, pp.253-270.
Dong, W., Liao, S. and Zhang, Z., 2018. Leveraging financial social media data for corporate
fraud detection. Journal of Management Information Systems, 35(2), pp.461-487.
Husna, A. and Satria, I., 2019. Effects of return on asset, debt to asset ratio, current ratio, firm
size, and dividend payout ratio on firm value. International Journal of Economics and
Financial Issues, 9(5), p.50.
Madan, R. and Chadha, R.K., 2019. Managing Intangible Cultural Heritage Information
Resources in Sahitya Academy Library, New Delhi: A Case Study. Library
Herald, 57(1), pp.84-105.
Mongwe, W.T. and Malan, K.M., 2020, December. The efficacy of financial ratios for fraud
detection using self organising maps. In 2020 IEEE Symposium Series on
Computational Intelligence (SSCI) (pp. 1100-1106). IEEE.
Oussii, A.A. and Taktak, N.B., 2018. Audit committee effectiveness and financial reporting
timeliness: The case of Tunisian listed companies. African Journal of Economic and
Management Studies.
Zeller, T., Kostolansky, J. and Bozoudis, M., 2019. An IFRS-based taxonomy of financial
ratios. Accounting Research Journal.