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CMA Intermediate · Business Laws and Ethics · Business Ethics and Emotional Intelligence

In the context of corporate governance, a whistle-blower or vigil mechanism primarily contributes to ethics by:

A whistle-blower or vigil mechanism lets employees and directors report genuine concerns about unethical or improper conduct safely, without fear of victimisation. This strengthens governance by exposing problems early. It does not replace internal audit, assure dividends, or move responsibility for misconduct onto the person reporting.

  1. AGuaranteeing higher dividends to shareholders
  2. BAllowing employees and directors to report genuine concerns about unethical conduct without fear of victimisationCorrect
  3. CReplacing the need for an internal audit function
  4. DTransferring liability for misconduct from management to the whistle-blower

Explanation

A vigil mechanism provides a safe channel for reporting unethical behaviour, with protection against retaliation. It supports, but does not replace, internal audit, and it has no connection with guaranteeing dividends or shifting liability to the reporter.

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