Question 1

Who should rule the corporation? Explain your answer with reference to three of the thinkers presented here.

Accepted Answer

The question of who should rule the corporation is a complex one, and the answer can vary depending on the perspective of different thinkers.

First, let's consider the perspective of Milton Friedman. Friedman was a proponent of the idea that the primary responsibility of a corporation is to maximize profits for its shareholders. From his perspective, the corporation should be ruled by those who have a fiduciary duty to the shareholders, such as the board of directors and top executives. Their primary focus should be on making decisions that will maximize profits and shareholder value.

On the other hand, John Rawls, a prominent political philosopher, would argue that the corporation should be ruled in a way that is fair and just for all stakeholders, not just the shareholders. Rawls' theory of justice emphasizes the importance of fairness and equality, and he would argue that the corporation should be ruled by a system that takes into account the interests of all stakeholders, including employees, customers, and the broader community.

Lastly, we can consider the perspective of Peter Drucker, a management theorist who emphasized the importance of effective leadership and management in organizations. Drucker would argue that the corporation should be ruled by leaders who are focused on creating a sense of purpose and direction for the organization, and who prioritize the long-term success and sustainability of the company over short-term profits.

In conclusion, the question of who should rule the corporation is a complex one, and the answer can vary depending on the perspective of different thinkers. Ultimately, the best approach may be to incorporate elements of each perspective, taking into account the interests of shareholders, stakeholders, and the long-term sustainability of the organization.

Question 2

Argue that corporations should have less governance. Now find four problems with your argument.

Accepted Answer

Corporations should have less governance because excessive regulations and oversight can stifle innovation and hinder business growth. By reducing the amount of governance, corporations can have more flexibility to make decisions and adapt to changing market conditions. This can ultimately lead to increased efficiency and competitiveness in the business world.

Four problems with this argument are:

1. Lack of accountability: Without proper governance, corporations may not be held accountable for unethical or harmful business practices, leading to potential exploitation of workers, consumers, and the environment.

2. Risk of corruption: Reduced governance can create opportunities for corruption within corporations, as there may be less oversight and transparency in decision-making processes.

3. Potential for monopolistic behavior: Without regulations to prevent monopolies and anti-competitive practices, corporations may engage in unfair business tactics that harm consumers and smaller competitors.

4. Negative impact on stakeholders: Less governance can lead to disregard for the interests of stakeholders such as employees, shareholders, and the community, potentially resulting in negative social and economic consequences.

Question 3

Why might a stockholder want a board of directors to "go easy" on a CEO? How can a board of directors curtail a CEO's actions? How can a board of directors encourage a CEO to be ethical?

Accepted Answer

A stockholder might want a board of directors to "go easy" on a CEO for a few reasons. Firstly, if the CEO is performing well and driving the company's success, stockholders may want to avoid any disruptions that could negatively impact the company's performance and ultimately their investment. Additionally, if the CEO has a strong track record and is well-respected in the industry, stockholders may be inclined to support the CEO and give them some leeway in their decision-making.

A board of directors can curtail a CEO's actions by setting clear expectations and guidelines for the CEO to follow. This can include implementing checks and balances, such as requiring the CEO to seek board approval for major decisions, or establishing committees to oversee specific areas of the company's operations. The board can also conduct regular performance evaluations of the CEO and hold them accountable for their actions.

To encourage a CEO to be ethical, the board of directors can establish a code of conduct and ethical guidelines for the company. They can also provide ongoing training and support to help the CEO and other executives understand the importance of ethical behavior and the potential consequences of unethical actions. Additionally, the board can lead by example and demonstrate their commitment to ethical practices, which can influence the CEO and the rest of the company to prioritize ethics in their decision-making.

Question 4

How much say-so should employees have over the decisions of the corporations for which they work? Explain your response.

Accepted Answer

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Question 5

What are good reasons to eliminate CEOs from corporations altogether? List four or five. Now list five reasons that show a corporation could not succeed without a CEO. Which list is more compelling, and why?

Accepted Answer

The answer of What are good reasons to eliminate CEOs...

Question 6

Why do CEOs so often fall into moral error? Use some insights from both this chapter and Chapter 12 to develop your answer.

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The answer of Why do CEOs so often fall into...

Question 7

If a corporation were like a government, what sort of government would it be? A democracy? An aristocracy? A constitutional monarchy? A dictatorship? Argue for an analogy and explain your answer.

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The answer of If a corporation were like a government,...

Question 8

What groups, norms, institutions and practices are necessary to promote good corporate governance? What changes must be made in China in particular to offset the past decade's concerns about corporate governance in Chinese corporations?

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The answer of What groups, norms, institutions and practices are...

Question 9

Sam Walton used to say that Wal-Mart was like "a family." Can a corporation be run like a family? How would that work? What moral problems might it solve? What new problems would be created?

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The answer of Sam Walton used to say that Wal-Mart...

Question 10

Research the origins of the corporation and show how corporate structure evolved to become what it is today. Can some of today's problems be anticipated, and perhaps even solved, by looking at the history of the corporation? Explain.

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The answer of Research the origins of the corporation and...

Question 11

Research Tyco and Dennis Koslowski. What could the board of directors have done differently? What were the warning signs? When and how could Koslowski and Tyco have been "turned around" by the board? Or should Koslowski simply have been fired at some point? If so, when?

Accepted Answer

The answer of Research Tyco and Dennis Koslowski. What could...

Question 12

Nader, Green, and Seligman argue that mismanagement of a corporation often occurs because of a failure to:

Accepted Answer

Nader, Green, and Seligman suggest that mismanagement often arises from not restraining the power of senior executives, which can lead to decisions that do not align with the best interests of the corporation or its stakeholders.

Question 13

Nader, Green, and Seligman argue that the board should actively review important executive business proposals to determine their full compliance with:

Accepted Answer

The answer of Nader, Green, and Seligman argue that the...

Question 14

In his advice to auditors, Warren Buffett asks whether the auditor would have received the information essential to understanding the company's financial performance during the reporting period if he were an:

Accepted Answer

Buffett's advice to auditors emphasizes the importance of understanding a company's financial performance from the perspective of an investor, ensuring that the information provided is comprehensive and meaningful for investment decisions.

Question 15

The only member of a corporation charged with the task of managing the CEO is who?

Accepted Answer

The corporate director, or more accurately, the board of directors as a collective, is responsible for overseeing the CEO's performance and making executive decisions, including hiring or firing the CEO.

Question 16

The board of directors is historically supposed to do what?

Accepted Answer

The board of directors is responsible for a range of oversight activities including establishing monitoring procedures, approving or vetoing significant executive decisions, and hiring or firing CEOs. They also have a duty to report to shareholders, which can be considered as reporting to the public in the context of public companies.

Question 17

A federal chartering law would ideally do what, according to the view of Nader, Green, and Seligman?

Accepted Answer

A federal chartering law, according to Nader, Green, and Seligman, would ideally reform the corporation so that the board must fulfill specified duties, ensuring accountability and responsibility in corporate governance.

Question 18

There are how many types of decisions in which Nader, Green, and Seligman believe a board needs to exceed its limited review role?

Accepted Answer

The answer of There are how many types of decisions...

Question 19

To do its job properly, the board needs what, according to Nader, Green, and Seligman?

Accepted Answer

Nader, Green, and Seligman emphasize the importance of the board having access to recent and germane corporate data to effectively fulfill its responsibilities. This access enables the board to make informed decisions based on the most current and relevant information about the company's operations and performance.

Question 20

An effective board will reduce what when it is working correctly?

Accepted Answer

An effective board enhances cohesiveness among the executives of the corporation by ensuring that there is a clear direction and alignment in the company's strategy, which helps in making decisions that are in the best interest of the company and its stakeholders.

Quiz 13: Whos Minding the Store?: The Ethics of Corporate Governance