Corporate governance and business ethics: Evidence from a sample of Algerian corporations

Abstract

Corporate governance systems are developed to govern corporations, build trust and create sustainable value for all stakeholders. Paradoxically, in spite of massive efforts in developing governance systems, corporate scandals are persisting. Different studies have strongly recommended business ethics as a solution to this paradox. Thus, this study explores if business ethics supports corporate governance practices in a sample of Algerian corporations. The study used a mixed methodology; qualitative: since this subject is poorly addressed in the Algerian context that requires an exploratory study. Quantitative by developing a structural model demonstrating the relationship between business ethics and corporate governance, Data for the study were collected by means of a questionnaire distributed on an anonymous basis to corporations’ senior managers in Sidi Bel Abbes district. Treatment of collected data is done using two types of analysis: the structural equations modeling approach by using the PLS Path approach (PLS Path Modeling) and linear regression. The study finds out that business ethics leads to better levels of corporate governance and supports its practices; and the reason is mainly due to an implicit involuntary commitment to laws as a minimum required level of compliance, and that the protection of stakeholders’ rights are the most important corporate governance’s dimension affected by business ethics.