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Lecture 9

ADM 1101 Lecture Notes - Lecture 9: Mutual Fund, Sarbanes–Oxley Act, Fiduciary

Course Code
ADM 1101
Kevin Petit- Frere

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Social Context of Business - Lecture Notes - 21/11/2016
Market Regulation
No need for government imposed laws or regulation
Laissez-faire approach
Government has no interference with the business
Consumer can force companies to behave in a particular way through boycotts ect.
Self Regulation
Corporate self discipline regulation
Mission, values statement
Industry self regulation
Government Regulation
Necessary, you cannot trust businesses to regulate themselves.
Government provides countervailing power to business by reflecting society’s
How business influences government
Financing and political parties
Publicly expressed support for a candidate or party.
Express political views.
Executives running for public office.
Any attempt that a business does to attempt to influence directly or indirectly
government activity.
Attempting to influence legislation and regulation, policies, grants/contracts, people
appointed to boards and public office.
Practices are unethical.
Business lobbying is too powerful
Unequal access to government
Cost of business lobbying passed onto customers
Offsets the influence of other groups
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Opinions on perspectives must be made known to governments if informed decisions
are to be made.
The Corporate Agenda
The real or imagined alleged domination of public policy or government programs by
corporations or business organizations in their own best interest.
The reduction of influence or impact over the economy allowing for a freer and more
efficient marketplace.
Pros: More competitive, higher productivity/efficiency.
Cons: Reduced environmental quality, financial uncertainty, monopolies.
Strengthening of the market at the expense of the state.
Provision of public service by the private sector
There are different degrees of the level of privatisation.
Ethical Implications
Appropriateness of government involvement
Matter of accessibility to government
Favouritism to some corporations.
Corporate Governance
The process through which the shareholders are represented by the board of directors.
The board of directors oversees the activities by the corporation.
Shareholders > Board of Directors > CEO > Executives > Workers
Shareholders vote for the members of the board of directors.
Power flows down the chain, but accountability flows back up through the chain.
Direct ownership (shareholders).
Indirect ownership (mutual fund holders).
The role of Ownership:
Key stakeholders that provide major a portion of the capital to finance
Types of owners:
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