You are the manager of an oil company, and safety/environmental issues are an important part of the business. While it is clearly important to comply with existing safety and environmental regulations, is legal compliance sufficient for maximizing shareholder value? If compliance is not sufficient, how much more should the firm spend on safety and environmental concerns?
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You are the manager of an oil company, and safety/environmental issues are an important part of the business. While it is clearly important to comply with existing safety and environmental regulations, is legal compliance sufficient for maximizing shareholder value? If compliance is not sufficient, how much more should the firm spend on safety and environmental concerns?
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- A well-run company should align the management’s interest and with the owner’s interests. What are some actions that stockholders can take to ensure that management’s and stockholders’ interests are aligned? Is this important? What are some of the risks/consequences if the management’s interests are not aligned with the owners?1. what should a management board and a supervisory board of a company do before aquiring a new agro- chemical company to avoid issues after the aquisition?Which of the following statements aligns with legitimacy theory? Companies will voluntarily disclose their sustainability practices in the annual report. Companies will engage in sustainability practices because it is an expectation of society. Companies will engage in sustainability practices because they believe they must protect more than just the company's assets. Companies will engage in sustainability practices because they believe their responsibility extends beyond shareholders. Companies will engage in sustainability practices because they believe the benefits will outweigh the costs.
- Which of the following statements are not correct about the concept of ESG Integration? (Select all that apply) ESG Integration is just a new name for Corporate Social Responsibility (CSR). Refers to how a company integrates environmental, social, and governance criteria into their daily business procedures, long-term planning, and organizational culture. It is only relevant to certain sectors, industries, and geographies. Both investors and corporations can benefit from ESG Integration.Managers of corporations need to act in an ethical manner O because ethical behavior is its own justification. O because a business must be trusted by investors, customer and the public if it is to succeed. O because business managers must answer to a higher authority. O because ethics violations will be punished by the law.All of the following conditions are likely to make ESG issues financially material (relevant) to a firm, except: O when it becomes easier for management and stakeholders ot gain insight into a company's environmental or socal impact. when the media and NGOS have more power and politicians are more responsive to ESG issues. when companies have the ability to effectively self-regulate O when a company develops a differentiated service or product that replaces a "dirty" or unsustainable way of doing business.
- The SEC is trying to get companies to notify the investment community more quickly when a "material change" will affect their forthcoming financial results. In what sense might a financial manager be seen as "more ethical" if he or she follows this directive and issues a press release indicating that sales will not be as high as previously anticipated?Which of the following is the overarching principle that a financial manage should follow when making decisions? O Decisions should generate the greatest benefits for the firm. O Decisions should be on behalf of the firm's owners that give the greatest benefit those owners, the firm's employees and the firm's other stakeholders. O Decisions should provid benefit to the firm without incurring costs. O Decisions should increase the value of the firm to its investors.Issue: In the post-Enron environment, and with the enactment of the Sarbanes-Oxley legislation, many firms are proactively portraying themselves as being “ethical.” Ethical behavior is, for example, part of the Corporate Social Responsibility movement. This behavior includes many dimensions, from the ethical treatment of employees and the environment, to ethical financial reporting. Academic research has found a positive correlation between a firm’s reputation and its financial performance. Questions to be Answered: Do you feel that strong ethics makes good business sense? Why do you think that there is a positive correlation between ethical behavior and successful corporate financial performance?
- Corporate social responsibility is primarily reflected in a firm's effort to deal with environmental problems. * TRUE O FALSECEO compensation design is effective in controlling the behavior in their decision making. How a compensation package could possibly work in adjusting a CEO’s risk taking behavior (in investments) and in balancing long-term vs. short term interests of a company?Within the context of financial management, it is important that organizations attempt to align their managers' interests with that of the shareholders. In Chapter 16, Berk and DeMarzo (2020) provide several examples of agency conflict or a conflict between the owners and the management of a firm. Examples of these are: (a) at times managers will take on less (greater) risk than they would if they were the owners of the firm and (b) due to the separation of ownership and control managers are able to entrench themselves within firms and have little risk of being replaced. Provide a few examples of mechanisms that organizations could use to align the interests of both the owners of the firm and its managers.