Business policies and Strategies Corporate governance and social Responsibility Dr. Jerry L. Huxell
Dr. Jerry L. Huxell Business Policies and Strategies Corporate Governance and Social Responsibility
Corporation a mechanism established to allow different parties to contribute capital, expertise, and labor for their mutual benefit Corporate governance refers to the relationship among these groups in determining the direction and performance of the corporation Dr. Jerry L. Huxell
Dr. Jerry L. Huxell Corporation • A mechanism established to allow different parties to contribute capital, expertise, and labor for their mutual benefit • Corporate governance refers to the relationship among these groups in determining the direction and performance of the corporation
Social responsibility a private corporation has responsibilities to society that extend beyond making a profit Carrolls Four responsibilities Economic-must do Legal -have to do Ethical -should do Discretionary -might do Dr. Jerry L. huxell
Dr. Jerry L. Huxell Social Responsibility • A private corporation has responsibilities to society that extend beyond making a profit • Carroll’s Four Responsibilities – Economic – must do – Legal – have to do – Ethical – should do – Discretionary – might do
Milton friedman There is one and only one social responsibility of business to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say. engages in open and free competition without deception or fraud Dr. Jerry L. Huxell
Dr. Jerry L. Huxell Milton Friedman • “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud
Parties Involved in governance Board of directors CEO and cfo Managers and employees Auditing agencies Standard setting bodies Institutional investors Banks Individual investors Dr. Jerry L. huxell
Dr. Jerry L. Huxell Parties Involved in Governance • Board of Directors • CEO and CFO • Managers and employees • Auditing agencies • Standard setting bodies • Institutional investors • Banks • Individual investors
Control and accountabilit Institutional investors Investors Banks Individuals Elect M Board Committees Of Auditors Directors Regulations A ppo C orporation Managers
Dr. Jerry L. Huxell Control and Accountability Investors Board Of Directors Corporation Managers Institutional Investors Banks Individuals Committees Auditors Regulations Elect Appoint Money
Responsibilities of board Approve(set) strategy and overall direction Hire and fire the Ceo and top management Control, monitor or supervise top management Review and approve the use of resources Care for shareholder interests Ensure adherence to laws and regulations Dr. Jerry L. Huxell
Dr. Jerry L. Huxell Responsibilities of Board • Approve (set) strategy and overall direction • Hire and fire the CEO and top management • Control, monitor or supervise top management • Review and approve the use of resources • Care for shareholder interests • Ensure adherence to laws and regulations
Agency Theory Problems arise in corporations because the agents(top management) are not willing to bear responsibility for their decisions unless they own a substantial amount of stock in the corporation Dr. Jerry L. huxell
Dr. Jerry L. Huxell Agency Theory • Problems arise in corporations because the agents (top management) are not willing to bear responsibility for their decisions unless they own a substantial amount of stock in the corporation
Stewardship The leery Executives tend to be more motivated to act in the best interests of the corporation than their own self-interests The theory focuses on the higher order needs such as achievement and self- actualization Dr. Jerry L. Huxell
Dr. Jerry L. Huxell Stewardship Theory • Executives tend to be more motivated to act in the best interests of the corporation than their own self-interests. • The theory focuses on the higher order needs, such as achievement and selfactualization
Members of board Inside directors -CEo. Coo. and presidents or vice-presidents Outside directors -active or retired ceos major shareholders attorneys Average of ll in large u.s. firms of whom two are insiders Typically earn an average of $33000 Dr. Jerry L. Huxell
Dr. Jerry L. Huxell Members of Board • Inside directors – CEO, COO, and presidents or vice-presidents • Outside directors – active or retired CEOs, major shareholders, attorneys • Average of 11 in large U.S. firms, of whom two are insiders • Typically earn an average of $33000
