Preventing Conflict or Ethical Issues between Management and Stockholders
Professor Gracer Yung
March 27, 2017
PREVENTING CONFLICT OR ETHICAL ISSUES
In the corporations with a huge quantity of workforces the managers are the individuals that accomplish the wealth in the finest concern of the stockholders (Boshkoska, 2015). In such kind of establishments, clash of importance may happen among the managers as well as the stockholders. Having additional data regarding the function of the organization, managers may utilize it in settling on choices for their own advantage, which then again can 't be as useful for the shareholders. Irreconcilable …show more content…
Hence, in this ethics paper, it explains and discourses about the approach taken to solve the ethical concerns or conflict among shareholders and firm managers known as agency problem or conflict.
Goals and Objectives
The foremost intention or goal of this ethics paper is to reply the subsequent questions:
• What is the principle of the notion of the organization ethical issue?
• What are the procedures that can help to overcome the agency problem?
The research or investigation is built on the proposition that the elucidation for the conflict or ethical issue like agency dispute stay in the amalgamation of numerous procedures (Boshkoska, 2015).
Understanding the Conflict of interest (Agency problem)
In the present day enterprises that are the utmost complex authoritative category, the fiscal investment is partitioned among rather substantial quantity of stakeholders who might be utilized in the organization, additionally lawful elements or potentially individuals might be the proprietors of the organization (Nwidobie, 2013). Inside these substantial companies, the interests of the administrators, shareholders, and leads are interlaced. Because of the way that the quantity of proprietors is huge, the stakeholders who can 't be utilized in the meantime,
This paper is going to discuss Ethics and Ethical Theories. It will include an introduction to ethical theories, virtue ethics, and care ethics. There will be sections discussing absolutism versus relativism, consequentialism versus deontological ethics, and lastly, free will versus determinism. It will also include a discussion about the study of morality and identify which of the approaches (Scientific, Philosophical, or Theological/Religious) are closest to my own personal beliefs. There will be a discussion regarding the three sources of ethics
None of the two parties is considered superior to the other. Their interests are taken care of under the corporate policy. The theory advances on the incentives that should be offered to the agents in order to motivate them to work in line with the objectives of the company. The theory suggests that the incentives that promote moral misconduct by the agents should be eliminated. This forces the companies to develop rules that discourage moral hazard. The SWM model fails to promote the interests of all parties that form a company. Its main focus is on the shareholders. However, the agency theory successfully considers the interests of both the principals and agents. Therefore, the application of agency theory promotes social welfare and fair treatment of all the
Managers and shareholders are the utmost contributors of these conflicts, hence affecting the entire structural organization of a company, its managerial system and eventually to the company's societal responsibility. A corporation is well organized with stipulated division of responsibilities among the arms of the organizational structure, shareholders, directors, managers and corporate officers. However, conflicts between managers in most firms and shareholders have brought about agency problems. Shares and their trade have seen many companies rise to big investments. Shareholders keep the companies running
This selection of ways of expressing ethical commitments does not seek to invalidate other approaches. The presentation of different ways of conceiving ethics alongside each other in this statement is intended to draw attention to the limitations of relying too heavily on any single ethical approach. Ethical principles are well suited to examining the justification for particular decisions and actions. However, reliance on principles alone may detract from the
This situation can lead to negative consequences for a business when its executives or management direct the organization to act in the best interest of themselves instead of the best interest of its owners or shareholders. Stockholders of the enterprise can keep this problem from arises by attempting to align the interest of management with that of themselves. This normally occurs through incentive pay, stock compensation, or other similar incentive packages that now cause the managers financial success to be tied to that of the company (Garcia, Rodriguez-Sanchez, & Fdez-Valdivia, 2015; Cui, Zhao, & Tang, 2007; Bruhl, 2003; Carols & Nicholas,
The following will describe an ethical issue in my own area of study as well as provide a moral response. It will be inclusive of two moral theories might respond to the issue and provide an explanation of how the principles contained in a code of ethics for my discipline relate to the issue.
The stakeholders are the shareholders, managers, and employees. The current situation has caused a dilemma that affects all stakeholders equally. When the business is at risk, everyone involved should be concerned about the future of the organization. However, the responsibility falls to the senior leaders of the organization to solve the current issues. However, holding 80% of the company’s stocks is concerned not only about the organizations current issues but also with the value of his investment, as he gets closer to retirement. This creates an ethical dilemma due to his personal finances and retirement being directly affected by the company’s performance. In addition, the CEO believes that the status of the organization is not as bad as some of the senior leadership team would say. The shareholders interest is purely profit. The impact of how Huffman Trucking runs the business and implements change has a direct reflection on the company’s image.
According to many scholars, the subject of corporate ethical decision making has many different avenues, such as what Zhong states “involves(ing) systematic and analytic deliberation” which also involve “intelligent choices”. While both
In the corporate form of ownership, the shareholders are the owners of the firm. The shareholders elect the directors of the corporation, who in turn appoint the firm’s management. This separation of ownership from control in the corporate form of organization is what causes agency problems to exist. Management may act in its own or someone else’s best interests, rather than those of the shareholders. If such events
Evaluate the choices faced by Steve Lewis, Peter Adario, and Eduord Sakiz (in Badaracco’s article) from the standpoints of the generalizability, utilitarian, and virtue ethics tests.
To discuss the different ethical considerations of this moral dilemma I have chosen to use the frameworks of Oberle and Bouchal (2009). To assist further in depicting my discoveries I will also be referring to the CRNBC standards throughout this paper.
In the problem between Trish and Dr. Ramos both sides are using the conflict avoidance approach. Dr. Ramos exhibits conflict avoidance because she knows that Trish is not performing well at work and that she does not pay overtime to Trish, but Dr. Ramos does not take the initiative to solve the problem. Trish exhibits conflict avoidance because one year ago, when she asked Dr. Ramos for a performance review and a raise of her salary, but Dr. Ramos took six months in providing Trish with both requests. Trish thought it was not worth it to go all over again with the same process of asking Dr. Ramos for anything.
An example of an ethical conflict is, I was working with a 16 year old who admitted he wanted to commit suicide. He is half Native American and half white. He started thinking about suicide when his grandmother terminated her rights as guardian and he was now living at the group home where I work. During the next couple of months we noticed his behavior was becoming more erratic and he started drinking alcohol more frequently, skipping school, hanging with gang affiliated youth, and was detained by police multiple times only to be let go the same day. This was an issue my coworkers and supervisor thought was unacceptable to be living in the group home where actions of youth can potentially shut down the facility and which are behaviors that
Economic science teaches us that due to their subjective needs, individuals have subjective preferences, and hence different interest. Occasionally different subjective interests give rise to conflicts of interest between contracting partners. These conflicts of interest may result in turn, in one or both parties undertaking actions that may be against the interest of the other contracting partner. The primary reason for the divergence of objectives between managers and shareholders has been attributed to separation of ownership (shareholders) and control (management) in corporations. As a consequence, agency problems