Profits For Shareholders Research Articles

A Critical Analysis of the Protection of Stakeholders’ Interests under the South African Companies Act: (Part 1)

Traditional company law enabled companies to embark on the ‘shareholder value oriented approach,’ the main focus being on the owners of equity. In terms of this shareholder value approach, the interests of the shareholders are paramount and interests of other stakeholders are considered only if their advancement will lead to shareholder value maximization, that is, ‘through the prism of shareholder profit maximization.’ Thus, the emphasis, in accordance with traditional company law, has been on the role of directors in managing and overseeing the company’s business primarily for the benefit of the shareholders. Most of the checks and balances on the powers of the directors were aimed at considering, primarily one interest group, namely shareholders of the company. There has, however, been a shift in public opinion towards the recognition of a variety of interests that should be considered wider than only those of the shareholders. The wider variety of interests includes environmental concerns and the interests of stakeholders such as employees, suppliers, consumers and the community. This paper provides a critical analysis of the protection of stakeholders’ interests under the Companies Act, 2008. The main concern is whether the Companies Act adequately protects the interests of stakeholders. The paper concludes that even though efforts has been made in the Companies Act 2008 to ensure that other stakeholders, apart from just shareholders are protected, it seems that legislation is far from effectively providing for the rights of stakeholders. In this regard, recommendations for law reform are made DOI: 10.5901/mjss.2014.v5n3p61

Reflections on 25 years at the Journal

My tenure at Emergency Medicine Australasia over 25 years has encompassed a number of editorial roles, beginning as the founding Editor in 1989 when the journal Emergency Doctor was a mere newsletter, before becoming Emergency Medicine, which was produced at Fremantle Hospital. I was then Scientific Editor when I stood down as Editor and Gerry FitzGerald was appointed Editor-in-Chief under a new organisational structure in 1994, by which time the journal Emergency Medicine was produced at the Australasian College for Emergency Medicine in Melbourne. This was followed by a return to the Editor-in-Chief position at the end of 1999 when the journal Emergency Medicine was now produced by Blackwell. Finally, my role became that of Emeritus Editor when Tony Brown’s tenure as Editor-in-Chief began at the end of 2003 and the Journal finally acquired its current title of Emergency Medicine Australasia. My goals and aspirations for the Journal over that time have understandably reflected where the Journal was in its development during each of those periods, and my role. In the beginning, I was more than happy with a regular newsletter that could enhance clinical communication between geographically dispersed emergency physicians and other clinicians involved in emergency medicine, who were members of the Australasian Society for Emergency Medicine. Fairly quickly though, it became clear that this vehicle could well mature into a bona fide medical journal. My greatest pleasures during this first 5 years of the Journal’s development reflected the same pioneering spirit we all had in developing the nascent specialty. It was exciting, the wealth of possibilities far outweighed any perceived risks, and there was a great sense of camaraderie among those Fellows and supporting staff who were volunteering their time and skills in this great adventure. AnneMaree Kelly, Bryan Walpole, John Vinen and Gordian Fulde were all keen and helpful, and the Annual Conference chat with Paul Gaudry and Ken Abraham kept things in perspective. By the end of that first 5 years, it was clear that Emergency Medicine was here to stay as a journal, albeit with many hurdles still to navigate; we had published 242 articles in that time, 17% original research, 17% case reports and 14% review articles. Gerry FitzGerald convinced me to stay on as Scientific Editor of the Journal when he was appointed Editor-in-Chief in 1994, and over the next 5 years, my goals were able to be much more focused on getting the journal processes right, without the distraction of having to produce the actual copy. As part of that, the Journal sponsors funded my attendance at the World Association of Medical Editors Conference in Prague in 1997. Here I met luminaries of journalology such as Drummond Rennie and Richard Smith, and discovered the evidence base (or lack thereof) around biomedical publishing itself. My interest was particularly sparked by presentations on peer review, conflict of interest, scientific misconduct and the ethics of biomedical publishing; I was amazed and alarmed to find out about the whole issue of guest and ghost authorship, listening to presentations by people who had written papers in major journals but who did not appear in the list of authors or even receive any acknowledgement. It was here that I began to be concerned about the influence of the pharmaceutical industry on medical publishing, and more importantly, on research and clinical practice in medicine. My views on the potential harms caused by secrecy in science became clearer after that conference, and after discussion with the Editorial Board, Emergency Medicine opened its process of peer review so that authors and reviewers knew each other’s identities. We continue with open peer review at Emergency Medicine Australasia to this day, and I believe it is one of the most important improvements we have introduced at the

Strategic CSR of MNC Subsidiaries in Emerging Markets: Evidences from China

With the advent of globalization, the track record of multinational companies has been vague in relation to their corporate social responsibility in emerging host markets. What seems lacking is a better understanding of what exactly is required of today's MNCs to simultaneously generate profits for shareholders while satisfying the legitimate demands from the multiple stakeholders in the countries where they operate. This paper explores whether and how MNC subsidiaries practice strategic CSR in the host market of China. Drawing on recent CSR literature, we develop a conceptual framework and then apply it to analyze the CSR strategies of eleven MNCs known as active in CSR involvements in China. Our exploratory case findings reveal distinctive features of CSR conceptualization and management of MNCs in emerging markets. The findings are analyzed and implications drawn regarding how MNC subsidiaries position themselves in the context of CSR.

Expressionists of the Twenty-First Century: The Commodification and Commercialization of Expressed Breast Milk

Breast milk expression has been promoted as liberating for women and as offering them more choices, but there has been little research on women's experiences of it and even less critical commentary on the consequences of its incorporation into mainstream behavior. Drawing on narratives of women in the United Kingdom about breastfeeding, we explore the increasingly popular practice of expressing and feeding expressed breast milk. We argue that breast milk has become commodified, breastfeeding commercialized and technologized, and the mother–infant relationship disrupted. We suggest that breastfeeding as a process is being undermined by vested interests that portray it as unreliable and reconstruct it in artificial feeding terms, so playing on women's insecurities. The major beneficiaries of expression are fathers who want increased involvement in infant care and commercial enterprises that aim to maximize profits for shareholders.

The information content of disaggregated accounting profitability: operating activities versus financing activities

This paper reports three empirical findings on the differential information content of the components of accounting profitability. First, the paper finds that the shareholder profitability driven by operating activities has a stronger association with annual stock returns than the shareholder profitability driven by financing activities. The finding provides empirical support for the FASB Financial Statement Presentation project, and the project suggests disaggregating accounting profitability into operating and financing activities. Second, the paper finds that the sustainable portion of operating profitability has a stronger association with annual stock returns than the unsustainable portion. This finding contributes to the literature by extending the two popular methods of breaking down operating profitability (DuPont analysis and operating liability leverage) into sustainable versus unsustainable operating income. Penman (Financial statement analysis and security valuation. McGraw-Hill, New York, NY, 2010) suggests disaggregating operating income into sustainable versus unsustainable operating income. Finally, the paper identifies the conditional persistence in Amir et al. (Rev Acc Stud 16:302–327, 2011) as one of the empirical attributes that affects the valuation usefulness of disaggregated accounting profitability. The conditional persistence measures the marginal contribution of disaggregated profitability to the persistence of aggregate profitability. This paper reports that the disaggregation is more useful in firms with significant differences in the conditional persistence of disaggregated components than in other firms. Test results are robust to controls for cross-sectional and time-series dependence in error terms.

What Do Stakeholders Want? An Exploratory Study of Stakeholders’ Multi-attribute Utility Functions

Recent scandals and business failures indicate that scholars and institutions should rethink the role of business in society. One path toward a potentially more stable capitalism could focus on overcoming the limitations linked to traditional business models that historically have been too focused on the single goal of shareholder profit maximization. A potentially useful frame for overcoming such limitations is stakeholder theory, which involves taking into account multiple stakeholder group’s interests in addition to those of shareholders. Key questions in this view remain to be answered, however, such as: How do particularly critical stakeholder groups define “value” themselves? And how can firms create these different types of value for their primary stakeholders? We begin to answer this question with an exploratory study based on the concept of stakeholder utility functions. We gathered data from the five primary stakeholder groups and developed inductive, empirical taxonomies of utility sources found in the multi-attribute utility functions of each group. In doing so, we take an initial step toward a better understanding of what actions may create value within and between heterogeneous primary stakeholder groups. Our results also offer insights into managerial opportunities for increasing utility for two or more primary stakeholder groups simultaneously, and ultimately into the viability of redirecting companies’ business models from profit maximization toward shared value creation.

Corporate Social Responsibility in the Board Room – When do Directors Pay Attention?

When do board directors pay attention to corporate social responsibility (CSR) issues? Board directors have traditionally focused on maximizing shareholder profit and viewed corporate governance narrowly as a way to meet this goal. They have paid little or no attention to CSR issues because they see CSR as a contrast to profit maximization. We argue in this article that companies can no longer ignore CSR. We propose that three conditions must be met in order for boards to pay attention to CSR. First, the board must have a mind-set that considers CSR as contributing value to the firm. Second, the board must have relevant competences that enable members to understand CSR issues. Third, compensation of top level management should reflect CSR performance. The first two conditions are directly linked to human resource development (HRD) because in order to embrace the specific challenges that CSR possesses, board members must develop an understanding of the CSR field and related challenges and opportunities for the company.

Corporate social responsibility in the board room – when do directors pay attention?

When do board directors pay attention to corporate social responsibility (CSR) issues? Board directors have traditionally focused on maximizing shareholder profit and viewed corporate governance narrowly as a way to meet this goal. They have paid little or no attention to CSR issues because they see CSR as a contrast to profit maximization. We argue in this article that companies can no longer ignore CSR. We propose that three conditions must be met in order for boards to pay attention toCSR. First, the board must have a mindset that considers CSR as contributing value to the firm. Second, the board must have relevant competences that enable members to understand CSR issues. Third, compensation of top-level management should reflect CSR performance. The first two conditions are directly linked to human resource development because, in order to embrace the specific challenges that CSR possesses, board members must develop an understanding of the CSR field and related challenges and opportunities for the company.

Does Better Corporate Governance and Legal Framework Result in Ethical Behaviour of Firms in Emerging Markets? An Examination Using Partial Least Square Estimation

Ethics is an all-pervasive subject of business, but its presence is rarely observed and measured in matters of corporate governance. From ethical point of view, the aim of corporate governance should be to ensure that certain moral standards are maintained and the legal system should be complied to while dealing with both external and internal business decisions that impact the stakeholders. However, the reality is that the companies concentrate on efficient governance mechanism at the cost of non-investor stakeholders with the objective to increase shareholder profitability and firm's short term financial value. This phenomenon gets pronounced in emerging markets. In this context, this study provides a detailed framework and a model for analysing how the governance and legal framework have an effect on the ethical behaviour of firms in 21 emerging markets. The findings of the study suggest that corporate governance and its legal framework do have an impact on ethical behaviour of firms in emerging markets. The results also suggest that firms operating in these countries tend to have a direct relationship with legal system and ethical behaviour and negative relationship with corporate governance and ethical behaviour.

An Issue of Life or Death

Not too long ago, an HIV-positive diagnosis was tantamount to a death sentence — for people in the East and the West, in the South and the North. The drug companies that perfected the antiretroviral therapies invested princely sums to find these miracle cures. To justify their investment, they rely on the promise of a patent — the twenty-year exclusive right to make, use, and sell an invention that is novel, non-obvious, and useful. The patent allows the drug company to charge high sums for the medicine, and thereby recoup its enormous investments in scientists and drug trials, while also turning a profit for shareholders and investing in research toward future breakthrough drugs. Thus patents have saved countless lives. But this structure has its limits. Indeed, the evidence is mounting that in crucial ways patents fail to promote the health of people in the developing world, and in some cases in the developed world as well.

“The Black and Cruel Demon” and Its Transformations of Space:

“The Black and Cruel Demon” and Its Transformations of Space:

Ownership, Financing, and Management Strategies of the Ten Largest For-Profit Nursing Home Chains in the United States

This study examined the ownership, financing, and management strategies of the 10 largest for-profit nursing home chains in the United States, including the four largest chains purchased by private equity corporations. Descriptive data were collected from Internet searches, company reports, and other sources for the decade 1998-2008. Since 1998, the largest chains have made many changes in their ownership and structure, and some have converted from publicly traded companies to private ownership. This study shows the increasing complexity of corporate nursing home ownership and the lack of public information about ownership and financial status. The chains have used strategies to maximize shareholder and investor value that include increasing Medicare revenues, occupancy rates, and company diversification, establishing multiple layers of corporate ownership, developing real estate investment trusts, and creating limited liability companies. These strategies enhance shareholder and investor profits, reduce corporate taxes, and reduce liability risk. There is a need for greater transparency in ownership and financial reporting and for more government oversight of the largest for-profit chains, including those owned by private equity companies.

Cross-Border Acquisitions and Optimal Government Policy*

This article analyses the optimality of policy specifications used to regulate the acquisition and operation of local firms by multinational enterprises. We emphasise the consequence of such regulations on the price of the domestic firm in the market for corporate control. We show that it is optimal to impose ceilings on foreign ownership of domestic firms when the government's objective is to maximise domestic shareholder profits, or a sum of those profits and tax revenues. While the optimal ceiling is high enough for the multinational enterprise (MNE) to gain control of the domestic firm, it nevertheless influences the price that the MNE must pay for the domestic firm's shares to the advantage of the domestic shareholders. Surprisingly, stringent restrictions on transfer pricing turn out to be strictly suboptimal in this context.

Capital structure and law around the world

In this research paper we examine the determinants of capital structure using a large panel of firms from 31 countries, all with different legal systems and different levels of investor protection. Our results confirm that institutional variables play an important role in a firm's capital structure, although firm-level determinants seem to be similar around the world. The most important conclusion of this research concerns the negative impact of the interaction between shareholder rights and profitability on market leverage. It suggests that the more shareholder rights there are, the fewer asymmetric problems occur.

Deregulation or democracy? New media, news, neoliberalism and the public interest

This article began from the premise that news media are in crisis. The crisis is being managed by closing papers or shedding staff. Drawing on extensive empirical research the paper argues that these cuts are having a devastating effect on the quality of the news. The cuts are being delivered to news so that shareholder profits remain in an increasingly deregulated news environment. This is having a particularly negative impact on local news. While new technology is opening up new spaces for the engagement of local communities and communities of interest, and new news spaces are emerging these are far from being adequate replacements for a quality, genuinely local, independent news service. The paper suggests that at the heart of this dilemma is a contradiction between the democratic potential of new technologies and the stifling constraints of the free market.

Why we need a theory of CSR

The contention of this paper is that, at the moment, the concept of CSR lacks a theory to give it clarity and direction in the corporate context, this makes it difficult for managers to know what to do, how far to go, and how to evaluate and account for the results they are achieving in their endeavours to implement CSR policies. To come to grips with the CSR movement we need briefly to consider why the demand for CSR has arisen, how it manifests itself in business practice, and whether it can be understood in theoretical terms so that it could become institutionalised in an accountable way. A candidate theory of CSR is offered: the communitarian theory of corporate purpose is to, within and upholding the rules of ethical business, produce the maximum sustainable value for stakeholders. The measure of this is profits for shareholders and deposits of social and natural capital for other stakeholders.

Metal Fatigue: American Bosch and the Demise of Metalworking in the Connecticut River Valley (review)

Reviewed by: Metal Fatigue: American Bosch and the Demise of Metalworking in the Connecticut River Valley Robert B. Gordon (bio) Metal Fatigue: American Bosch and the Demise of Metalworking in the Connecticut River Valley. By Robert Forrant. Amityville, N.Y.: Braywood, 2008. Pp. x+201. $38.95. From the early decades of the nineteenth century through the 1950s, manufacturing industries that relied on a community of skilled artisans flourished in the Connecticut Valley, the region between New Haven, Connecticut, and Springfield, Vermont. Here were found firms such as Winchester and Colt that still have immediate name recognition, as well as less-well-known companies, such as Jones & Lamson or Van Norman, which supplied vital machine tools for American industry. In the decades following 1960, most of these industries declined or departed. The well-paying jobs and community support they provided withered. Innovative tool-making companies, started by talented engineers, passed through second- or third-generation family members and then to absentee owners. The city of Springfield, Massachusetts, was particularly hard hit, first by the closure of the federal government's Springfield Amory and then the departure of most of its other precision manufacturers. A depleted tax base led to urban decay and eventually forced state-appointed managers to take over the city government. Robert Forrant gives us an account of these events as seen by a former union business agent at one of the Valley firms, American Bosch, a maker of sophisticated products for the automobile industry. While he focuses on the death struggles of American Bosch, he also describes the fate of other Valley industries, large and small, and the problems faced by their displaced workers. The foreword to Metal Fatigue announces that it is a story "of greed, of malfeasance, and stupidity." In this spirit, Forrant draws most of his actors in black (managers) and white (union members). Managers closed or moved manufacturing elsewhere to enhance shareholder profits while unions filed grievances and called strikes to keep not only jobs, but jobs that preserved the union shop with it rules of seniority, checkoff, and customary practices. This is as far as Forrant goes in looking for causes of the demise of the Valley's machine-tool and precision metalworking industries. Readers will have to turn elsewhere for the many complex factors, beyond managerial malfeasance, that led to the decline of precision manufacturing in New England. Valley industries were burdened by high energy costs, decayed transportation facilities, often-corrupt municipal governments, obsolete plants, dysfunctional school systems, and urban crime, to name some of the chief factors in their demise. Some of these problems originated as unintended consequences of policies of the federal government: for example, when American Bosch moved south it was the beneficiary of cheap TVA power. Welcoming, corruption-free local governments were an attraction. Workers who did not insist on customary practices and rigid job descriptions adapted more easily to new manufacturing techniques. The old, multistory [End Page 206] factory buildings in the Valley lacked the floor-loading capacity needed for new machinery, and were difficult to bring up to new OSHA workplace requirements. New England industries once were served by an excellent rail network. It didn't survive federal subsidization of motor-vehicle transportation, rapacious local taxes, and unsustainable union work rules. Untreated industrial wastes that had passed into streams and landfills for decades had to be cleaned up. Emission controls were hard to install in older plants. All of these issues deserve examination in a story of the Valley industries. In the 1960s Valley machine-tool artisans and entrepreneurs faced a true technical revolution in numerical-control techniques. They dithered while Germans and Japanese, who had had their industrial slates wiped clean by war and aid from the United States, took over New England's preeminent place as machine-tool makers. One is reminded of the eighteenth-century French innovators who created the then-revolutionary technique of manufacturing mechanisms with interchangeable parts. French artisans and entrepreneurs wanted no change in their traditional way of working; they blocked adoption of this technique in their country. Transferred to New England, which in 1800 had no established ways of working or customary practices, the new technique throve and...

The modern corporation as a safe haven for taste-based discrimination: An agency model of hiring decisions

This paper proposes a principal–agent model of labour market discrimination. In this model, the firm manager is a taste-based discriminator and has to make unobservable hiring decisions that determine the shareholder's profits, because workers differ in skill. The model shows that performance-based contracts may moderate the manager's propensity to discriminate, but that they are unlikely to fully eliminate discrimination. Moreover, the model predicts that sectors with high skill leverages discriminate less. Finally, the impacts of a wage gap between groups and of a diversity premium are investigated.

Broken by Design

This article argues that the corporation is a type of technology, and that as a technology it is failing society. The article begins by exploring the history of the corporation and posits that it is a social technology that is distinct in its function (creating profit for shareholders and generating wealth), process (growth and expansion), structure (adherence to a pyramidal arrangement of managers) and personhood (a permanent legal identity conferred by the law). The article then explores how corporations consolidate wealth and perpetuate inequality, socialise many of their risks to the public sector, commodify human beings and the natural environment, and bestow massive external costs to society at large. Since many of these aspects of corporate activity are invisible, recognising them may offer an important first step towards their reform.

Balancing agendas in donor testing

Balancing agendas in donor testing