Managing Conflict—Measures and Mechanism

Shital Jhunjhunwala ()
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Shital Jhunjhunwala: University of Delhi

Chapter Chapter 9 in Corporate Governance, 2023, pp 187-199 from Springer

Abstract: Abstract Understanding and creating mechanisms to build strong governance systems. The chapter elaborates certain measures—establishing a Code of Ethics, prohibition of Insider Trading, implementing a Whistle-Blower Policy and monitoring of Related Party Transactions that should be adopted as part of the corporate governance framework to reduce conflicts among stakeholders and improve governance of the company. Insider trading provides those with access to private information an opportunity to make unfair gains. In several scams such as Enron and Satyam, it was noticed that those in control, falsified accounts to show a rosy financial picture to boost share prices and make a quick buck before the firm collapsed. Regulations have thus been introduced prohibiting insider trading. Whistle-blowers can play a significant role in revealing information that would otherwise go undetected, leading to improvements in the prevention, detection, investigation and prosecution of corruption. The risk of corruption is heightened in environments where reporting is not facilitated and whistle-blowers protected. Managers constantly face ethical dilemma in business decisions. A code of ethics guides employees on how they are supposed to approach problems, the organization’s core values on the basis of which they are to arrive at decisions, and the standards to which the company representatives are held. While entering into a contract or arrangement, the company may give favourable treatment to related party in terms of pricing, or credit period, or some other condition which unfavourably impacts the company. Although related party transactions are themselves legal, they may create situations of conflict of interest and should be closely monitored.

Keywords: Related Party Transactions; Conflict of Interest; Whistle-Blower Policy; Insider Trading; Code of Ethics; Code of Conduct; Whistle-Blower; Related Party; Insider; Unpublished Price Sensitive Information (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-99-2707-4_9

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DOI: 10.1007/978-981-99-2707-4_9

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