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2.32     Discuss the arguments for and against a single goal of increasing shareholder value.

Shareholders are the owners of the entity. They risk their capital and take on the responsibility that owning a business entails. Legally, under the corporations act, constitution, partnership agreement, etc. they are the party with the rights to make decisions and as such take on the responsibility to run the business past papers. They take on the full risk of not making a profit (losing money), and need to ensure all relevant business legislation is complied with (work place health and safety, product safety, complying with industrial awards and agreements). The corporation’s law indicates that directors (who are shareholders and have been voted to be on the board of directors) have to act in good faith and in the best interests of the company. Therefore, arguably to put another group’s best interests first may conflict with this direction. Further, it may be that some decisions past papers need to be made where there is a direct conflict between one stakeholder group compared to another. An example would be where a company decides to source their raw material from a non-local firm due to their processes being more environmentally friendly. In a number of circumstances what is good for shareholders may indeed be good for other groups. For example, treating employees with respect and offering good employment conditions (although at extra cost to the entity and therefore shareholder in the short term) may be good for the entity in the long term as employees will want to stay and productivity may increase for past papers is available.

However, it has been argued that other stakeholders purchase test banks invest (not money) in the business as well. There is also growing disillusion with the self-interest principle. That is, everyone acting with their own self-interest in mind doesn’t lead to a society that values the collective or the environment. The self-interest principle is very short term. Having a conscious regard for others and the effect of your decisions can lead to a society worth living in.

Further to the above, there is an increased discussion regarding which shareholders the board should be more concerned about. With the increase in and types of trading transactions there is more uncertainty about who owns the company as any point in time. For instance, there is increased ‘day traders’ traffic. So the board in making a decision purchase test banks regarding say a takeover offer may increase the value for the short term shareholders (day traders) by accepting the offer but decrease the value for the longterm shareholders. There is also increased short selling activity. Does the board have a duty to decrease the value of the shares to benefit the short selling shareholders?

The increased shifting of ownership has heightened the argument that shareholders are not the primary stakeholder. Although legally they have taken the monetary risk, the company structure allows a coming together of all stakeholders whether labour, suppliers, capital and the community for purchase test banks.

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2.27     What is meant by the term ‘shareholder value’?

 The view that holds that the purpose of the corporation is to maximise shareholder wealth. Shareholders are the owners of the entity and it is through this ownership and their legal standing in relation to their rights and responsibilities that have past papers traditionally seen shareholders as the primary focus in business decision making

2.28     Explain the following:

a)  triple bottom line reporting;

Triple bottom line reporting refers to the economic, social and environmental performance of a company. Elkington proposes that a company’s long term viability is a function of how well it can balance the three areas. The concept supports the view that companies have a duty of care to society at large. The movement is developing performance measures to assist the analysis of social and environmental performance.

b) past papers

Corporate governance refers to the direction, control and management of an enterprise.

c) the relationship of stakeholders to corporate governance.

There is much debate in business literature as to whether an organisation’s sole responsibility is to its shareholders, or whether there is a wider duty of care for organisations to identify all the values and principles at stake. A theory called ‘stakeholder theory’ proposes that the purpose of the firm ‘is to serve as a vehicle for coordinating stakeholder interests’, not the narrow view that the purpose is to maximise shareholder wealth. After all, the firm is an artificial entity and the shareholder purpose of the firm is simply based on the shareholder’s right to property. Proponents of stakeholder theory view the purpose of a firm as far greater past papers available.

It is related to corporate governance because corporate governance is about the direction, control and management of organisations. Therefore, the management  purchase test banks of the nation’s capital and operations rests on the philosophy of the company directors that have the responsibility to govern enterprises. How and to what extent they consider all stakeholder views will have an impact on society in the long term.

2.29     Discuss the relevance of legitimacy theory to corporations.

The basic tenant of this theory suggests that entities, to remain legitimate, must operate within the bounds and norms of society. In other words, society allows the entity to operate (pursue their objectives and rewards) so long as the entity agrees to act in a socially purchase test banks acceptable manner. Proponents of legitimacy theory call this the ‘social contract’. The ‘social contract’ represents the explicit and implicit expectations that society has about how the organisation should conduct it operations. An organisation must be responsive to these expectations as they change over time.

2.30     Outline the possible consequences for an entity that breaches its ‘social contract’.

Sanctions, a reduced demand for products or a limitation on available resources could be some consequences for breaking the social contract.

2.31     Outline the corporate governance principles and recommendations.

The Australian Stock Exchange (ASX) corporate governance principles and recommendations 2^nd edition, are:

1.      Lay solid foundations for management and oversight

2.      purchase test banks

3.      Promote ethical and responsible decision making

4.      Safeguard integrity in financial reporting

5.      Make timely and balanced disclosure

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2.23     What is stewardship theory and how is it related to corporate governance?

Stewardship theory suggests that motive for serving on a board goes beyond a past papers purely self-interest perspective. This motive may be guided by a code or company purpose or directors may see themselves as stewards of a particular interest. It is generally under this banner that there has been an increase in the number of independent non-executive directors on boards, thus serving the interests of a large number of small shareholders or the community and environment. At times key suppliers or debt providers may take a place on a board to help protect their relevant interests. No matter what the interest they are stewards of some greater good, not just shareholder wealth. However, it may go beyond this as summarised by Peter Weinberg past papers (former Goldman Sachs executive):

“Serving on a board is like taking on a position in public service...It is not (and should not be) a wealth creation opportunity but a chance to play a role in the proper workings of our marketplace.” (p.43, Nordberg, 2008).

2.24     What is risk management and why is it included in the ASXCGC corporate governance principles and past papers recommendations?

Risk management is the systematic process of assessing the probability of something unexpected happening, and the establishment of policies and procedures to manage that risk. It is important for the board and management of enterprises to consider risk in order to properly understand the impact of the environment of their enterprise and to help ensure its survival into the future. It is included in the ASX principles of good corporate governance as it is fundamental for the decision makers in any enterprise to manage risk for purchase test banks.

2.25     Give some examples of each of Carroll’s four key responsibilities of business. Have any of these changed from one responsibility grouping to another over the last decade?

The four key responsibilities of business are economic, legal, ethical and discretionary. Many examples could be given.

1.   Economic — to provide goods at a fair price, to pay creditors on time, to ensure a suitable return to shareholders.

2.   Legal — to comply with the laws, i.e. submit financial reports on time, adhere to pollution regulation, comply with trade practices act dealing with fair pricing and purchase test banks.

3.   Ethical — to treat employees fairly

4.   Discretionary — to provide child care facilities for workers.

There would be a number of items that would have gone from the ethical grouping to the legal grouping, especially those issues relating to the environment. Issues such as pollution emission and effluent discharge may not have been regulated to the same extent 50 years ago. Child care facilities are one example that may go from discretionary to ethical over the next decade with pressure on companies to provide such facilities.

2.26     List some of the reasons given to explain why businesses act in a socially responsible manner.

·   purchase test banks.

·   Economically it makes sense as higher prices and more product sales will be the outcome (good marketing and public relations exercise).

·   Limit interference by government.

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