I agree with your assessment and conclusions regarding shareholder wealth with the context of ethics. I agree with you that the primary role of management is the maximize the wealth of those who provided management with capital. In this instance, management should generate the highest returns relative to the risk incurred. In addition, management must do this from an ethical perspective being sure to adhere to applicable rules (Sliman, 2017). Lately, Im also seeing companies take a much more proactive approach to social justice issues and causes around the country. Recently, Major League Baseball removed the all-star game from Atlanta to protest voting rights restrictions from Republican legislatures. We are also seeing companies become much more outspoken about racial inequality as well. I believe many of the issues can either maximize or lower shareholder wealth depending on the company and the stance that they are taking on a particular issue. What is your opinion on the recent rise of social activities on the part of corporations? Do you think they should engage in such behavior?
Discussion Post 2
Hello,
I agree with your assessment regarding the avoidance of accounting chicanery and fraud. Many managements are often under pressure to make short-term earning target and financial goals. As a result, they often you accounting gimmicks to help portray better underlying operations than were actually incurred. This ultimately misleads investors and undermines the overall financial integrity of the capital markets. Investors should avoid companies that use accounting gains to show results that are representative of the underlying performance. Likewise the SEC should be more proactive in catching these frauds.
References
1. Sliman S. Alsoboa, 2017. "The Influence of Economic Value Added and Return on Assets on Created Shareholders Value: A Comparative Study in Jordanian Public Industrial Firms," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(4), pages 63-78, April
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