Corporate Governance And Business Ethics

Yes, they should change the strategy because it provides benefits to the society.

No, they should not change the strategy because the strategy already helps them save costs while generating huge revenues.

No, they should not change the strategy because the change would necessitate making tough ethical decisions.

Yes, they should change the strategy because creating value for society is against the principles of stakeholder strategy.

Doing so could yield significant business opportunities that could improve the standard of living of the poor.

Doing so is the best way to ensure that shareholders have the most legitimate claim on profits made by the organization.

Doing so could be the only way to meet stockholder expectations in a highly competitive market.

Doing so will help to prevent the inclusion of more nontraditional partners into internal firm value chains.

managers need to keep economic needs and societal needs disconnected from each other.

a firm should expand its internal value chain to include nontraditional partners.

businesses should focus on creating regional clusters such as Silicon Valley in the U.S.

the largest but poorest socioeconomic group can yield significant business opportunities.

Corporate social responsibility

Stakeholder impact analysis

Corporate governance

Shareholder capitalism

Adopting a narrow shareholder perspective

Separating economic interests and social needs

Practicing effective corporate governance

Adopting the principles of shareholder capitalism

The expectation that the agent will follow the country's laws and regulations

The expectation that the agent will go above and beyond the call of duty

The expectation that the agent will reconnect economic and social needs

The expectation that the agent will act in the principal's best interest

The law of legal personality

The separation of ownership and control

Limited liability for investors

Transferability of investor ownership

shareholder capitalism scenario

inside director-outside director conflict

fiduciary responsibility oversight

principal-agent problem

the company has more outside directors than inside directors.

the strategy adopted by the company's agents tries to emulate the mission statement created by the principals.

stockholders and agents are involved in the day-to-day operations of the company.

the goals of the principals and agents are not aligned with each other.

the information is extremely secure and protected from exposure to anyone outside the company.

public stock companies are characterized by information symmetry.

insiders are the first to learn about important developments before the information is released to the public.

agents are legally permitted to freely trade the information in exchange for benefits, unlike principals.

Yes, because it is unethical to trade stocks based on insider information irrespective of the final outcome.

Yes, because it is illegal and unethical for Saul to possess any kind of insider information.

No, because Saul did not ask the CEO to disclose such information to him.

No, because Saul did not make any profits from trading stocks using this information.

stakeholder strategy

information asymmetry

corporate governance

groupthink

principals

shareholders

agents

clients

agent

manager

employee

principal

Corporate governance seeks to benefit multiple stakeholders, not just shareholders.

Corporate governance provides rules for making decisions on corporate affairs.

Corporate governance attempts to address the principal-agent problem.

Corporate governance seeks to create a separation between ownership and control.

Based on a tipoff by a Goldman Sachs employee, the Galleon Group was able to sell its holdings in Goldman Sachs' stocks prior to the announcement.

GE knew that it could create a profitable venture out of producing green products, so it rolled out the ecomagination strategy.

Mark Hurd, CEO of HP, was unaware of the sexual harassment allegations, and the board's demand for him to resign caught him by surprise.

Goldman Sachs was party to the Abacus deal despite knowing its shortcomings.

Galleon Group's decision to trust Rajat Gupta's information as accurate

Rajaratnam receiving information regarding Warren Buffet's impending multibillion-dollar injection into Goldman Sachs

Warren Buffet's decision to inject a huge amount of money into Goldman Sachs based on its financial reports

Rajat Gupta providing information regarding Warren Buffet's impending multibillion-dollar injection into Goldman Sachs

corporate governance

on-the-job consumption

adverse selection

shared value creation

conflicts that arise in corporations should be addressed in the legal realm

corporations are more than a set of contracts between parties

companies should focus on generating profits for stockholders

principals and agents have interchangeable roles

they delegate authority of strategic business units to general managers.

they decide to get involved in the day-to-day operations of a company.

the board of directors possesses more information about the company than they do.

the firm designs work tasks, incentives, and employments that minimize opportunism.