In this paper, we discuss that “moral hazard is more widespread than adverse selection in a company, but tackling moral hazard is one of the major issues in corporate governance (“CG”)”. Moral hazard is based on asymmetric information, and it happens when one party gets more information about the intentions or actions and has an inappropriate tendency to behave from the deviation of another party with less information. More precisely, moral hazard occurs due to one party is not willing to bear the full reactions of its actions, and has a proclivity to act less carefully than it otherwise would, know that any responsibility for the reactions of any loss from its actions would be bearable by another party (insurers). For example, executives
Intrinsically, this theory does not perceive other purposes or obligations to deliver more resource or salary to people that need most of resources and to the people that deserve most of resources. Utilitarianist especially pay attention for doing best things that create happines in whole society. However, utilitarianism largely prefer a specific distributive action. For example, they give priority to decrease wealth of rich people for delivering it to the poor people - distribution of goods or resource. Furthermore, in companies, utilitariansts can prefer to take away the salary of board of directors for expanding salary of permanent workers of the company.
From Milton Friedman’s view, maximizing profit is the only focus of any business corporation, so long as it does not violate the state’s laws and the fundamental rules of society. Most firms are disposed to agree the above statement, thinking that business as a whole should not perform social responsibility at a cost of shareholders ('Shareholder value or social responsibility? ', 2007). However, the case of ‘Brent Spar’ revealed the failure of corporate social responsibilities, showed that complying with the legislative requirements is insufficient from the view of the
So understanding that management might take our firm stance on increasing worker control and improving pension benefits as a sign that the Grandville plant will be less responsive than ever to business needs, we will also propose that management introduce profit-sharing. By tying the businesses profit directly to the income of the workers, management can rest a bit easier knowing that our workers won’t be purposefully crippling the business by refusing technology that might improve plant efficiency and business profitability, because that would very well hurt the workers,
Understanding Six Flags’ enterprise value of $1.311 billion (Exhibit 2), H Partners is able to make a more informed decision as to the overall health of the company. It is also important to note that the enterprise value is influenced by the amount of cash that Six Flags will hold after the reorganization. The enterprise value can be inflated by lowering the amount of cash that Six Flags is going to hold, however, the less cash they have available to them, the higher the chance of falling back into liquidity problems, therefore, we feel that taking an average is a reasonable way to determine the amount of
Regulated capitalism is a form of hands-on policy with the government including more strict codes for the industry. Having a laissez-faire economy could be more beneficial for some corporation executives; however, to ensure that the monopolies are non-existent and equality in the workplace is sufficient, a more regulated capitalism would be the fairest governance of the free-market capitalism. The first reason that regulated capitalism is better for the economy than free-market capitalism is because regulated capitalism is better for the smaller business. To better understand what regulated capitalism represents, regulated capitalism is, “Regulations on private enterprise, including taxation, that enable policies and/or processes that benefit citizens and enterprises alike”(“Well Regulated Capitalism”). Without regulated capitalism, larger companies would be able to take over smaller companies to further their revenue and location sites.
• Not investing much of the time on responsible investment could get the company through in the short run but for long run sustainability of the organization which is on social, financial, ecological and political basis responsible investment is suggestable for the organization. • With the instances of Levis, Maggi and Tata it can be clearly concluded that definitely ethical investment is major contributor for the sustainability of the organization • Changing mind set of the investors as well as the customers could also be one of the reasons why organizations are looking forward for responsible
Verma and Elman (2007) understand that not all governments and companies desire strict labor standards as they can be hindrances to competitiveness. If the labor standards are too extensive, strict, and expensive, buying companies will go somewhere else and the industry in that country will decline. Nonetheless, Verma and Elman (2007) argued that labor standards are beneficial to all because they can boost standards of living and national economic growth (p. 57). To support the design of effective labor standards, they examined the pros and cons of hard and soft models where hard models are legislation-based and soft counterparts are largely voluntary and pressure-based. Findings showed that consensus is vital to the creation of legitimate labor standards (Verma & Elman, 2007).
“By saving energy in industrial production through recycling, the greenhouse gas emissions from factories and industrial plants are lessened and the use of fuels that emit harmful gases during production is also minimized. Recycling non-biodegradable waste (rather than burning it) will contribute a lot to help reduce air pollution and greenhouse gases that depletes the ozone layer,” stated in the article, Benefits of Recycling (2015). One way to eliminate garbage is through burning, but some people have no idea of what are the bad effects of it. Pollution- free atmosphere and environment will result to a better living. Lastly, mandatory recycling helps to save money that is spent for disposing trash and other waste materials of a business.