Week 2 Intro - Week 2 Introducing Stakeholder Stockholder Debate Allan Greenbaum SOSC 3040 Corporate Social Responsibility Stockholder vs

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Week 2: Introducing Stakeholder/ Stockholder Debate Allan Greenbaum SOSC 3040 Corporate Social Responsibility
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Stock holder vs Stake holder Theories Theories about the basic job of corporate management. Issue: Who do corporate executives work for? For shareholders (stockholders) OR for everyone who has a stake in the company?
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Stock holder theory Claim: Executives work for stock (share) holders Job: to maximize profit while fulfilling legal, contractual and (minimal) moral obligations to other stakeholders (customers, employees, suppliers, etc.)
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Stake holder Theory Claim: Executives work for all stakeholders of a firm Job: to advance and balance the interests of shareholders and other stakeholders
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Different modes of analysis Both stockholder and stakeholder theories come in: Normative Positive Strategic Legal Versions These make distinct claims!
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Normative Stockholder Theory Claim: Executives ought to prioritize making money for shareholders (profits, return on equity)—i.e., they are morally obligated to do so, it is morally good that they do so While fulfilling basic legal, contractual and moral obligations to others
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Normative Stakeholder Theory Claim: Executives ought to manage the firm in the interests of all stakeholders)— i.e., they are morally obligated to do so, it is morally good that they do so
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Positive Stockholder Theory Claim: Executives do in fact act to maximize firms’ profits/return on equity This is an empirical/social scientific claim Truth may depend on incentives, economic structures, corporate governance models, etc.
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Positive Stakeholder Theory Claim: Executives do in fact manage firms with attention to the interests of all or some stakeholders (including but not only shareholders) This is an empirical/social scientific claim Truth may depend on incentives, economic structures, corporate governance models, etc.
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This note was uploaded on 11/16/2010 for the course NATURAL SC NATS 1505 taught by Professor Isley during the Spring '10 term at Columbia State Community College.

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Week 2 Intro - Week 2 Introducing Stakeholder Stockholder Debate Allan Greenbaum SOSC 3040 Corporate Social Responsibility Stockholder vs

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