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Stockholder Theory.docx

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Department
Philosophy
Course
Philosophy 2074F/G
Professor
Porter
Semester
Winter

Description
Stockholder Theory 4/13/2012 11:16:00 AM The Purpose of the Corporation  The corporation a way of organizing human activity o Began as legal entities defined by contracts and government documents that existed for single purposes  Capital – resources that enable labour to be productive o So capitalism as envisaged by Adam Smith is good because it encourages people to invest their resources and goods, thus turning personal resources into capital and increasing production which increases return to everybody  Egoism can lead to utilitarianism Stockholder Theory  Stockholder Theory – the management of a company should only concern itself with the interests of the stockholders  Many of the arguments in favour of the Stockholder theory assume that the capitalist system is one that produces the most good for the most people  The Stockholder theorist that we are looking at is Milton Friedman. o The argument from ownership – corporate managers are employees of the owners of the corporation (the stockholders)  Stockholders hold stock in corporations with the intention of receiving a return on their investment, the corporations' profits, and they are entitled to those profits
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