Abstract

To achieve ethical corporate governance, directors' first priority must be to examine their own structure and operation. If theboard is vulnerable to charges of unethical conduct, it will have little credibility in its oversight role over the corporate culture of theorganization. An examination of a positive model of corporate governance in the mutual fund industry provides an effectiveillustration of several ways to add ethics to corporate governance: 1) legislation; 2) jawboning; 3) peer pressure; 4) regulation; 5) training and reflection. While peer pressure and training are more effective than the others, all those methods taken together cannot solve every ethical lapse. Only individual board members, working together, can influence the conduct of the board and propel themselves and the organization towards a standard of continuing ethical excellence.