LGST 210 Lecture Notes - Lecture 5: Stakeholder Theory, Fiduciary
25 Apr 2015
School
Department
Course
Professor
Document Summary
Executives are agents for principal, which are the stockholders. Agency theory: agents are the fiduciary of their principals. Duty bound to work for the interests of the stockholders. Stakeholders, employees, and others are only instrumentally valued while stockholders are the only ones intrinsically valued. You would be pursuing socialist ends by executive actions if the executive uses corporate assets to improve public welfare (o nly government should be doing that, not executives) Managers are not elected, government is elected so they have jurisdiction for acting towards socio-political ends. Diminishing freedom when pursuing socialist ends using corporate assets (stockholders have less freedom) Corporate executives can be charitable when using their own assets, but cannot take stockholder/corporate resources to engage in public welfare. The market theoretically solves all negative problems by itself. The corporation will continue to pollute river until people start dying from the water, then people will boycott the corporation until the corporation limits production.
