Ethics and policies Essay Example | Topics and Well Written Essays - 2500 words - 2

Ethics and policies - Essay Example Ethics can best be defined as standards of moral behaviour that are accepted by society as right versus wrong (Nickels et al, 2005). Businesses, as much as an individual, are held accountable for their actions in relationship to societys ethical expectations. Most modern companies are struggling to emerge profitable and reputable in a market that is saturated with competition. One of the tactics used to increase positive visibility in the business world is in establishing a distinctive ethical position. As much important as a companys mission or vision statement is the establishment of a Code of Business Conduct and Ethics annual report. The purpose of this statement is to apply ethical standards to all employees, directors, officers, and possibly subsidiary groups that define disciplinary actions for those who breach the code of conduct. What this serves is to separate the company from any possible negative assessments of its policies on behalf of consumers and to send the message t hat any deviation from ethical code will be immediately corrected through new initiatives or employee accountability for the act. In establishing a distinctive ethical position, most companies tend to address issues such as conflicts of interest, confidentiality, fair dealings with other entities, compliance standards, and sometimes cultural ethical standards when dealing with international organisations. The publicity gained from such an ethics code aids not only the business by securing its ethical actions, but also serve the communities, shareholders, and can prevent costly legalities brought on by unfair business practices. These types of lawsuits can be as minor as a breach in employment policy to as extensive as misrepresenting company earnings to inflate company stock. In a world where multiple businesses have been flattened due to false representation of company revenue, offering a It is quite clear to see the

Incentive Effects Of Stock Purchase Plans Case Study

Incentive Effects Of Stock Purchase Plans - Case Study Example The study proved that equity-based compensation plans tend to have a more positive impact on shareholder wealth; one of the primary reasons behind adopted these compensation schemes is to ensure that managerial and shareholder interests are in sync and equity ownership boosts key execuctives more than sub ordinate employees. Smitt and Watt claimed in this study that equity based compensation schemes will trigger top employees more than the lower level employees. The hypothesis is proved using identified plans in the study. The stock purchase plans that were meant were key executives guaranteed greater returns compared to other adjusted returns. The result thus vaguely support the Smith-Watts suggestion. For instance, the IRS 423 plan which was meant for the employees within the organization gave a zero reaction on the announcement date. Article 2: The impact of Long range Managerial Plans on Shareholder wealth by James A Brickley Economists have often voiced out the economic importan ce of different types of managerial compensation schemes. However there are certain groups, for instance shareholder advocate groups who are against managerial compensation contracts. These groups insist that some plans are advantageous for managers at the expense of other shareholders. This means that while they may prove worthy for managers, they put the interest of shareholders at stake. Moreover, very little research has been conducted on this subject. There is insufficient literature out there to draw inferences from as well. The effect of various managerial plans on shareholder wealth is an empirically important issue. This study attempts to look into this issue more comprehensively and empircally. This study throws insight on the stock price reaction when there was on announcement regarding changes in long term managerial compensation packages. It is a comprehensive study undertaken by James A Brickley. The study presented evidences proving that most change plans are welcomed with positive market reaction. This is because at the end of the day, they increase shareholder wealth. The study is unable to mark comparisons between different types of market reactions to different types of compensation schemes. The difference could not be nailed in this study. The result supports the nation that every firm has it’s own set of managerial compensation requirement and every firm treats it different. Thus, there is no compensation package that is better than the other one. The profitability and feasibility of every compensation plan depends on the organization. A cross sectional analysis was done to prove the afforementioned notion. Article 3: The Modigilani Millar Propositions after 30 years by Merton H. Miller This article was published in the Journal of Economic Perspective. The journal was published on the 30th anniversary of the Modigilan-Millar propositions regarding the cost of capital, finance and the theory of investment. The article was published i n the American Economic Review of June 1958. This article throws insight into the kind of significance these propositions hold today ; to what extent have they impacted the financial models of today, what reforms did they arouse, where do these propositions stand today and how have they progressed after almost three decades of intense scrutiny , rancor debates etc. Most of these controversies can be thought off as settled today, thanks to all the research done in