Unit 3 - Unit 3 Friday, January 11, 2008 4:11 PM Ch. 2 The...

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Unit 3 Friday, January 11, 2008 4:11 PM Ch. 2 The Purpose of the Corporation Introduction, pp. 45-50 Friedman, pp, 50-55 Freeman, pp. 55-64 Hasnas, pp. 65-74 Ch. 3 Corporate Character and Individual Responsibility Introduction, pp. 95-98 Moore, pp, 99-109 Velasquez, pp. 109-122 The Purpose of the Corporation Wednesday, March 26, 2008 3:34 PM Corporation s are considered legal persons o Therefore, they are responsible for their actions What is the goal that a corporation ought to pursue? (normative, ethical question) o Provide/produce some product of service for the people o Businesses do this to make money/profits for stockholders Chain of Command: Stockholders/Shareholders Managers Employees Customers Suppliers Local Community Stockholder Theory/View: By M. Friedman A corporation's goal is to maximize profits for the shareholders without violating laws (e.g. fraud and deception) Theory has a precise and simple nature Why subscribe to this view? 2 arguments: (BB p. 45-46)
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1. Argument from ownership Stockholders own the corporation by holding shares Their money should achieve what they want o Argument from Contract If the money is used for something/does not generate profit, then the corporation is stealing and violating their contract In the market, there is unanimity so all transactions are free In politics, there is conformity The elected government imposes taxes whether you agree or not Stakeholder Theory: : By R. E. Freeman (rival to the stockholder theory) : Stakeholders are everyone in the Chain of Command : Corporations should serve the interests of all the groups : Argues that stockholders do not own the company There is a contract/agreement with stockholders to do their job Still a respect of property rights
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Unit 3 - Unit 3 Friday, January 11, 2008 4:11 PM Ch. 2 The...

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