View
- Term
- Definition
- Both Sides
Study
- All (80)
Shortcut Show
Next
Prev
Flip
BCOR 370: Final
Corporate Governance
|
The system by which businesses are directed and controlled
|
1. Shareholders
|
a. decide who is to serve on the Board of Directors.
b. approve/reject bylaw changes
|
2. Board of Directors
|
a. creates/approves corporate policies
b. chooses Board Chair
c. approves/disapproves recommendations by the Audit, Compensation and Corporate Governance Committees
|
3. Executive Committee
|
a. chooses the agenda for Board meets.
b. approves major contracts
|
Outside Board Member (director)
|
One who owns stock but derives no income from the organization other than dividend income
|
Inside Board Member (director)
|
One who derives an income from the organization other than dividend income
|
Two-Tiered Board
|
One where the executive committee makes all the real decisions leaving the other members of the board with no real power
|
Vested Stakeholder
|
An organization or individual with a claim to the
organization's future earnings
|
Stakeholders
|
Vested interests as well as those who are or can be affected by the operations of the organization
|
Say on Pay
|
The right of shareholders to have a direct vote regarding executive compensation
|
Special Purpose Entities (SPE)
|
limited partnerships or companies created to fund or manage risks associated with specific assets
|
The Sarbanes-Oxley Act
|
Create a governmental accounting board and mandatory compliance with a broad range of accepted accounting procedures relating to the management, reporting, and auditing responsibilities of businesses and financial institutions
|
The Problem of Agency
|
the use of one's decision making power to direct the resources of an organization to one's personal interests
|
Chinese Fire Wall
|
Where one division in a firm cannot ethically reveal "material" information to another division
|
Mosaic Analysis
|
A method used by stock market analysts to gather information about a corporation's character and financial stability
|
Passive Unethical Behavior
|
The deliberate hiding of material financial or product information so as not to harm sales volume
|
Deception
|
This involves, misleading language, illusions, hidden costs, and the obscuring of disadvantages
|
Caveat Emptor
|
This makes consumers responsible for transactions on the grounds that they should know all vendors are dishonest
|
Churning
|
sales commissions are increased by a broker by buying and selling a client's assets more often than needed
|
Planned Obsolescence
|
a product's usage time is deliberately shortened
|
Unsuitability
|
a good or financial product is sold even though the seller knows it will not meet the buyer's needs
|
Bundling
|
high profit but less desired products and services are packaged with high demand goods
|
Dependence Creation
|
companies create a market instead of servicing an existing market
|
Staple
|
A product whose life cycle can span many generations
|
Fad
|
A public desire for product whose use is so superficial the desire is based more on whim than need
|
Price Manipulation
|
we encounter underpricing, discriminatory pricing, and price fixing
|
Underpricing
|
a large company engages in price manipulation to drive a smaller competitor out of business
|
Discriminatory pricing
|
an industry engages in price manipulation by lobbying for laws which allow them to sell their product to certain buyers at higher costs
|
Price fixing
|
a company engages in price manipulation by conspiring with a competitor to divide a market
|
The marginal utility of money
|
The increased quality to life, or financial return, brought on by the last dollar spent
|
The marginal utility of a good
|
The value to a consumer created by a good's last incremental unit of consumption
|
Shadow pricing
|
The comparing of free market purchasing practices in order to assign dollar values to quality-of-life goods or even to life itself
|
Organization for Economic Cooperation and Development (OECD)
|
Promotes ten elements common to many business codes of conduct
|
UN Global Compact
|
Promotes international "good corporate citizenship"
|
Concepts and Principles
|
Underlie a code's guidelines
|
General Policies
|
General recommendations that tell how, in general situations one is to apply the code's principles
|
Specific Policies
|
General recommendations are analyzed into specific activities and how they are to be handled
|
Passive Corruption
|
No acceptance of unsolicited gifts
|
Active Corruption
|
No giving of solicited or unsolicited gifts or a request made for a gift in a quid pro quo arrangement
|
A failure in reliability
|
a. skips meetings or is chronically late
b. can't get reports in on time
|
A failure in initiative
|
a. never supererogates
b. needs pushed even for the required
|
Supererogation
|
To do more than is required
|
A failure in responsibility
|
a. tends to blame others for all errors
b. contributes little to team assignments
|
A failure in maturity
|
a. more attracted to play than work
b. generally disorganized, messy
|
A failure in sensitivity
|
a. gossipy and critical of others
b. arrogant, rude, or disrespectful
|
A failure in loyalty
|
a. defiant to organizational rules
b. has a reputation as a job-jumper
|
Teleological honor
|
The view that businesses and professionals owe it to themselves and others to "be all they can be"
|
Hedonism
|
the view that pleasure and happiness are the highest goods
|
Epicureanism
|
The view that pleasure and happiness are best attained through friendship, liberty, and simplicity in the material goods of life
|
Maximalism
|
the view that any proper action is worthy of being carried out to its fullest extent
|
Proactive CSR
|
The actions of an organization that are targeted towards the achievement of a social benefit over and above maximizing profits for its shareholders and meeting all its legal obligations
|
Passive CSR
|
The perspective that the only obligation of a corporation is to maximize profits for its shareholders in the provision of goods and services that meet the needs of their customers
|
Proactive Approach
|
The perspective that a corporation has an obligation to society over and above the expectation of its shareholders
|
Pre- Depression Model
|
Pursuit of profit is constrained by an obligation to do no harm to others
|
Market failure
|
the inability of a sales transaction to include the full cost of a good or service
|
Post-depression Model
|
Producers are best viewed as social creations organized to serve social goals through government regulation (Friedman)
|
Contemporary Model for CSR
|
Producers should be proactive in making their community a better place to live
|
Market failure awareness
|
Companies often create profits from activities that create costs for third parties
|
Changed corporate image
|
More and more the public sees corporate profits as primarily going to its officers and the rich
|
Sustainability
|
There is now the realization that natural resources and habitats are being destroyed at a record pace by perfectly legal corporate activities
|
Globalization
|
There is now the realization that Western businesses potentially profit from foreign unprotected workers and environments
|
Failure of the public sector
|
The public is losing confidence in government's ability to correct local community problems
|
Libertarianism
|
the view that individuals should, as much as possible, be free of government and social initiatives
|
Libertarian Robert Nozick's entitlement theory
|
The distribution of goods should be made, not by a a princple, but by the validity of prior events
|
Free Enterprise
|
Economic system where the decision as to what is to be produced is determined by individual citizens allowed to own the tools of production
|
Free markets
|
Economic activity where the decision as to what is to be purchased is determined by individual citizens allowed to keep the major portion of their income
|
Adam Smith's invisible hand
|
The collective good is maximized when each individual is allowed to pursue his or her own self interest within the law
|
Pareto Improvement
|
Any free market exchange of goods which makes both parties better off
|
Pareto Optimality
|
That point in free markets where the exchange of goods is so efficient that one more exchange would make someone feel worse off
|
Capitalism
|
Free market system using money as an exchanged commodity
|
Usury
|
The rental of money at unfairly high interest rates
|
The labor theory of value
|
the view that profits generated by capitalism are unethical in that only labor creates wealth
|
Socialism
|
Economic system where the decision as to what is to be produced is determined by a government allocating the tools of production to itself and its own contractors
|
Communism
|
View that for socialism to work government must also direct individual career choices
|
Zero-Sum Game
|
An exchange of goods which makes one party better off and one worse off
|
Karl Marx's
|
According to ability to each according to need
|
John Rawl's Veil of Ignorance
|
One should promote a society in which he or she would want to live regardless of his or her status at birth
|
Egalitarianism
|
The view that society should promote the equal treatment of every citizen
|
Social Justice Theory (generic)
|
The view that government, business, and professional ethics should serve the goal of equal opportunity
|
Social Justice Theory (managerial)
|
The view that every economic right granted by a society carries with it an economic responsibility to that society
|