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Corporate ethics and governance
Making ethical business decisions in business
Ethics within corporations
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Business is a game of gambling. In poker, a person can be honest and keep his or her hands above the table, but there is always a person that has hands under the table. Businesses find many people with hands under the table when the issue of corporate self- dealing appears. Corporate self-dealing is when a trustee or other fiduciary of a business takes advantage of his or her position in a transaction for self-benefit instead of the company’s overall benefit. Self-dealing can include corporate assets or opportunities. John H. Farrar and Susan Watson notes, “If a director deals with a company that he or she is a director, there is a risk of conflict of interest as well as a breach of the duty to act bona fid for the good of the company or promote success” (495). Without some form of limitations businesses have no way to control the act of self-dealing within the company. Although numerous solutions have been suggested, the solution implemented needs to be able to form to each individual business without limiting the transactions of the business. Nonintervention, Prohibition, and Majority of the Minority Vote have all been considered, however, these solutions are not efficient enough for the business world or able to best limit the role of self-dealing. Nonintervention only ignores the problem in hopes it can resolve itself, while Prohibition provides only a strict method that does not ensure that people will not perform the actions. The Majority of the Minority vote resembles a voting system, but is not time efficient. While it only guarantees that the transaction is fair, the best solution to limit corporate self-dealing is to incorporate the Fairness test into business transactions. Various solutions have been implemented to ... ... middle of paper ... ...ibition creates a strict environment and does not stop illegal dealing. Finally, the Majority of the Minority Vote fails because it is based solely on a voting system that is liable to biased based on a group preference vote. The Fairness Test ensures that the transaction will be upheld in a fair manner, which helps limit major acts of self-dealing. Life is not fair, but there are ways of making it fair. Works Cited Farrar, John H., and Susan Watson. "Self-Dealing, Fair Dealing And Related Party Transactions--History, Policy And Reform." Journal of Corporate Law Studies 11.2 (2011): n. pag. EBSCO. Web. 21 Oct. 2013. Goshen, Zohar. "The Efficiency of Controlling Corporate Self-Dealing: Theory Meets Reality." California Law Review 91.2 (2003): n. pag. JSTOR. Web. 21 Oct. 2013. Sobel, Lester A. Corruption in Business. New York: Facts on File, inc., 1977. Print.
Sweeney, B, O'Reilly, J & Coleman, A 2013, Law in Commerce, 5th edition, Lexis Nexis, Australia.
encourage honest and ethical conduct, including fair dealing and the ethical handling of conflicts of interest;
Since the SEC had been doubted for a long time that whether they had the authority to promulgate proxy access rules, especially the doubts arose by the filing of the Business Roundtable complaint , the Dodd-Frank Act’s providing of such statutory authority to the SEC was necessary to erase such doubts. And the SEC has already taken advantages of such authority and approved a rule that allows shareholders with at least 3% of a company’s stock to include nominees for up to 25% of the directorial positions.
Jagolinzer, Alan D. "SEC Rule 10b5-1 and Insiders' Strategic Trade." Management Science 55.2 (2009): 224-39. ProQuest. Web. 21 Mar. 2014.
Bagley, C. E. (2008). Winning Legally: The Value of Legal Astuteness. Academy of Management Review, 33(2), 378-390.
Wagner-Tsukamoto, S. 2007. Moral agency, profits and the firm: Economic revisions to the Friedman theorem. Journal of Business Ethics, 70, 209–220.
Miller, Roger L., & Jentz, Gaylord A., (2012), Business Law Today (9th Ed), South-Western Cengage Learning
D’Andrade, Kendall (1985) Bribery in the Journal of Business Ethics, D. Reidel Publishing Company (Boston), pp. 239-248.
As a consequence of the separate legal entity and limited liability doctrines within the UK’s unitary based system, company law had to develop responses to the ‘agency costs’ that arose. The central response is directors’ duties; these are owed by the directors to the company and operate as a counterbalance to the vast scope of powers given to the board. The benefit of the unitary board system is reflected in the efficiency gains it brings, however the disadvantage is clear, the directors may act to further their own interests to the detriment of the company. It is evident within executive remuneration that directors are placed in a stark conflict of interest position in that they may disproportionately reward themselves. The counterbalance to this concern is S175 Companies Act 2006 (CA 2006) this acts to prevent certain conflicts arising and punishes directors who find themselves in this position. Furthermore, there are specific provisions within the CA 2006 that empower third parties such as shareholders to influence directors’ remuneration.
H.Stephen Harris Jr. and Philiilp R.Stein, "Brief Summary of Antitrust Law Regarding 'Leveraging' ", 1995.
James G. Skakoon, W. J. King and Alan Sklar (2007). The Unwritten Laws of Business. /: Tantor Media.
middle of paper ... ... ty.htm#index [3] Lecture notes [4] [1916] 2 AC 307, HL. [5] Farrar, J and Hannigan, B (1998) Farrar's Company Law (4th edn), p.75 [6] [1933] Ch 935, CA.
Kozlowski’s long line of bad decision making is used by businesses as well as academics as an examples of unethical behavior and why internal controls are important to corporate governance. As the primary indicator of performance, corporate governance reports often display the strength and weaknesses of the company but are only as reliable as the set of values and ethics of the person’s implementing the rules.
McAdams, T., Neslund, N. & Neslund, K., 2004, Law, Business and Society, 7th Edition, New York: McGraw-Hill Companies.