2003/WFDSA/HKDr. Jaw1

2003/WFDSA/HKDr. Jaw2 Corporate governance and ethics: Perspectives from Taiwan Professor Dr. Yi-Long Jaw National Taiwan University September 29, 2003

2003/WFDSA/HKDr. Jaw3 Outlines Corporate Governance Business Ethic WFDSA’s Code of Ethics Perspectives from Taiwan

2003/WFDSA/HKDr. Jaw4 Cases and Lessons (Maximizing whose wealth?) Enron, WorldCom, Xerox (USA) Kennex,Chung-Hsin Bank, Sunrise Construction Co. (Taiwan)  Misconduct by CEO or chairman of the board (might get away)  Falsified financial statement over years  At the expense of other investors and employees (including management) Corporate Governance

2003/WFDSA/HKDr. Jaw5 new agenda Internal Auditing: whistle blower External auditing: accounting firms and CPAs (Certified Public Accountant) Independent board directors Corporate Governance

2003/WFDSA/HKDr. Jaw6 Board of directors 2001 Statistics by SFI shows: they held 20% of voting shares in contrast to 55% of seats on board for public companies. Newly listed company is encouraged to appoint 2 independent directors and 1 independent supervisor as of 2002/2/22 Corporate Governance

2003/WFDSA/HKDr. Jaw7 M. Iskander and N. Chamlou, "Corporate Governance: A Framework for Implementation,“the World Bank,

2003/WFDSA/HKDr. Jaw8 Business Perspectives Government Regulation: to prevent or to remedy market failure and governance failure Transaction Cost Theory: to organize operations between market or hierarchy Agency Theory: to align the goals and behavior between principals and agents Corporate Governance

2003/WFDSA/HKDr. Jaw9 Business Decisions Legal requirement  market mechanism  hierarchy arrangement  values  Market mechanism: between firms (rivalries, vertical or horizontal counter parties and partners)  Hierarchy arrangement: branch, affiliate, joint venture, licensing or franchise, contracting  Values for board members and management Corporate Governance

2003/WFDSA/HKDr. Jaw10 Values (looking internally)  Corporate culture, pledge, cornerstones Business Ethics (looking externally)  Social responsibility, codes of conducts, codes of ethics Values and Business Ethics

2003/WFDSA/HKDr. Jaw11 1.Responsibility to customers 2.Responsibility to employees 3.Responsibility to stockholders 4.Responsibility to creditors 5.Responsibility to the environment 6.Responsibility to the community Ethics and responsibility – a stakeholder approach

2003/WFDSA/HKDr. Jaw12 1.Toward consumers 2.Toward direct sellers 3.Between direct sellers and companies 4.How to file a code complaint 5.Code Administrator directory WFDSA’s Code of Ethics

2003/WFDSA/HKDr. Jaw13  Consumer first  Sellers/ Distributors/ Dealers/ Consultants next  Then, market mechanism / competition  Environment: Green business  Community: minorities, retarded, diversity On WFDSA’s Code of Ethics

2003/WFDSA/HKDr. Jaw14  Independent director or supervisor  For public companies and private companies  Rubber stamp or devil’s advocate  Obligations and rights / liabilities  Implementation  Initiatives on committee or research task  Pre-board meeting interaction Perspectives from Taiwan

2003/WFDSA/HKDr. Jaw15  Ethics  To employees  To the countries where we do business  (To the world we live in)  Values  Of Management / Leaders  Integrity, respect for the potentials of others, willingness to help, admiration for success Perspectives from Taiwan

2003/WFDSA/HKDr. Jaw16 Thank you ! 謝謝你 !