From all we have discussed above, it is not difficult for us to notice the key role the founders or executives played when establishing the corporate image. Clients tend to link the founders image to the corporate image since the founder's behaviors imperceptibly play a leading role for the employees and thus gradually transforming into a company's core values.
[1] Since the improperness of the founder or officer would directly hurt the interests of investors, then whether investors can impose any ethical restrictions on founders and/or officers or not? Indeed, various jurisdictions have set up different mechanisms which facilitate investors to impose ethical limitations on the founders or officers of the corporations.
For instance in the USA, the Code of Business Conduct of a Corporation would assist investors to impose ethical limitations on executives or founders of the corporation. Such document normally describes the ethical rules an entrepreneur should follow. The reason why most of the US corporations adopted it is probably because the Securities and Exchange Commission (SEC) has implemented section 406 of the Sarbanes-Oxley Act of 2002, which requires public companies to disclose whether they have equipped with the Code of Conduct (CC) for their senior financial officers. If the corporation has no CC, it needs to explain why the Code of Conduct was not introduced in the company.
[2] [3] Furthermore, the New York Stock Exchange and the Nasdaq Stock Market both set the requirements to have a Code of Ethics which would be applicable to all employees, senior management, and directors as an essential condition for public companies to be listed on markets.
[4] In spite of the fact that the ethical standards and consequences of violations that are contained in such code may vary from company to company, at least it provides possible approach for investors to impose ethical restrictions management. In addition, the US Regulation S-K
[5] also requires a public held company to disclose the family relations and moral character of all directors and executive officers, indirectly imposing an ethical restrictions on them.
In addition, if it goes about the restriction of founder or executives' immoral behavior and investors' interests protection, we have to mention another important role in the corporation - an independent director. An independent director is neither an executive officer of a publicly held corporation nor does he own a direct or indirect relationship with the company business.
[6] In general investors are able to impose restrictions on executives' improper behavior by the decision of board of directors. However, since in some large publicly owned companies, the boards are increasingly dominated by chief executives officers or founders the company gradually fell under the control of such bodies. The purpose of setting up independent directors is to alleviate this phenomenon and to let them play a supervisory role to regulate the behavior of the officers, thus protecting the rights and interests of investors. The independent (non-executive)director system originated in US is now widely adopted not only by most of the European countries like UK
[7] but also by Asian countries like China
[8] and Middle Eastern countries like UAE
[9] .
Based on example of Elon Musk and Travis Kalanick it is evident that every movement of founders or executive officers of a corporation may affect the interests of the investors, especially when it is talked about those publicly held corporations. To avoid unpleasant consequences the investors should think impose ethical restrictions on senior management. The founders or executive shall keep in mind that they should be cautious when referring to material events which would influence the development of the corporations and the interests of investors.