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Chapter 3 You might want to make improvements to these notes because they were from last year (winter), I attended this class however did not take part. What I did was I take addition notes on top of these notes, with more updated examples and etc. PS: my

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Administrative Studies
ADMS 1000
Eytan Lasry

Corporate Government The case study of The Malden Mills Company - A company; founded in 1906 (lots of textile industries) - Very few left (last one in this area) - Invented polar fleece – revolutionary - Management, organization structure - Respective with employees: background; good management - Many things he could do with the insurance money Question 1: - About CSR (corporate social responsibility) - Stakeholders (employee’s) o Might influence the stake holders o Obligations = provide stakeholders with jobs o Describe what CSR is *pyramid 1) Economic 2) Legal – doesn’t have to do anything 3) Ethical – the right thing to do 4) Philosophical CSR (corporate social responsibility) - To protect and the welfare of society = reopen the factory in the same location (protect and improve) - Largest employer in *Matitusitest (300 thousand problems) {*check spelling of place*} o Lead to other problems - Doing the right thing** Question 2: - Agreements (for and against) - Slide 11 in lecture 2 o Use those to make points o Profit (number one goal) - List and integrate into question (events)** Question 3: - No right / wrong answer - Prick either side - For and/or against and WHY? *important **really important ⁞ Therefore statement - Think through alternatives and push through ⁞ In the end, he rebuilt the factory ⁞ Did not last, only at the beginning BECAME THE POSTER BOY – MALDEN MILLS Slide 1: - Important topic - Basic idea of corporation; central problems (agency problems and solutions) Slide 2: - Corporation are define by the laws o Beams o Exists independently o Distinction from people and corporations - Corporations o Separate and independent Slide 3: - Advantages o Sell shares o Business; one person owned o Separate identity o Investors = gain and passed o Does not die; business (person dies and business does to) o Limited liability  You can only lose how much you put in  Business you are everything the business is o No public shares; investment lost o Cash for shares - Disadvantage o Double tax 1) Corporate tax – each year tax  Whereas large business – only one tax (not less than the double tax) 2) Share holder tax (divedent) – pay on the shares o Corporation  Example: profit 10 million  25%; 2.5 million rest belong to the share holders  Once they get divedent pay taxes from there *important **really important ⁞ Therefore statement *growing corporation – divedent not pay out compared to older companies o People want to know information o Problem agency  Hire mangers to deal with day to day problems  Result to big problems; conflicts (no same interest) - Corporate governance o Outline job details Slide 4: - OCED = system that makes sure what people are supposed to do and when Slide 5: - Owners and controllers (not the same people) - Conflicting incentives First book - Corporation (growing) o Shareholders were rich and popular o Huge corporations o 20 century = widely dispersed shareholders  Not one person who owns 50%  No one owns more than 5% - Mangers act for on behalf of the shareholders best interest - Does not look at themselves first Second book - New techniques running railroads - Management became professional o Knew more about the business than the owners o Owners with no knowledge = lead to managerial revolution o Agency (separation of managers and owners) Conflict - Mangers go to shareholders (instead of paying them) they think on behalf of the shareholders best interest o Conflict o Owners don’t’ challenge mangers - Shareholders want to get the most profit out of teh corporation *important **really important ⁞ Therefore statement - Mangers; paid a salary (want highest possible salary) o Size of corporation = larger salary for manger o Biggest way to grow your business; buy out other corporations Slide 9: - Mangers tell shareholder what is best o Difficult to buy another business (higher than market price) - Gives mangers incentives o Stock opinions (the right to buying shares at a specific price) o 15% of your pay = 20% - 25% lower of shares o Encourages them (mangers) to do better (higher bonus price) - Stock: goes up (gain) and goes down (lose) = opinion gain profit for the corporation as well - Act in the benefit of the corporation Problems -
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