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LCA - Coggle Diagram

- - - - :check: The role of the board in corporate governance. Do we have effective and independent board?
      - :question: What will create sustained economic value
        :question: Are we supporting (or undermining) institutions that healthy market competition and capitalism depend on?
        :question: Are we encouraging effective corporate governance
    - - :check: Am I following the letter and spirit of the relevant laws?
        :check: Is my proposed action both permissible and advisable ?
        (Don’t just ask “can I”?; ask “should I?")
      - Frameworks:
        Fiduciary duties
        Insider trading
        Ordinary vs gross negligence
        Fraud
        Employers vs contractors
        Protected classed
    - - Ethical lens -- frameworks
        
        Consequentialism -- "greater good argument"
        
        Non-consequentialism -- "Duties and responsibilities argument"
        
        Virtue ethics -- "people should act based on their individual virtues"
        
        Other frameworks, like confusionism -- those argue on actions that are oriented along the community rather that the individual, "the individual should act according to the value of the community they belong to"
      - The role of context in ethical analysis
        
        Reflective leadership and failures of ethical decision making -- reflective leadership and sound ethical decision making is about the continuous and iterative combination of the considerations below
        :check: Awareness
        :check: Judgement
        :check: Action
        :check: Leadership
        
        The influence of the the context and situation on decision making
        :check: Unreflective obedience, people can follow commands blindly even when they know that it will lead to damaging circumstances
        :check: Social loafing and the bystander problem, people work less hard and are less inclined to intervene when they are in groups
        :check: Group think
      - Moral disengagement -- convincing ourselves that the moral standards do not apply to my case, useful in the cases of necessary evil.
        
        Restructuring behaviour to appear less harmful:
        :check: moral justification
        :check: euphemistic labelling
        :check: advantageous comparison
        
        Minimising victim's distress
        :check: Distortion of consequences
        :check: Dehumanising the victim
        
        Obscuring moral agency
        :check: Displacement of responsibility
        :check: Diffusion of responsibility
        :check: Attribution of blame
  - - - Ethical responsibilities
        
        :check: How can you ensure every employee is treated with dignity & respect. Be aware of blind spots and bad judgement.
        :check: What it means to be “fair”. Consider meeting legitimate expectations, procedural fairness, distributional fairness.
        Power asymmetry is exhibited in the power of the employer and the costs to the employee and employer.
        Manager's legal, ethical and economic responsibilities and how proper and fair exercise of power can have tremendously positive effect
        The fair exercise of power is based on:
        :check: Legitimate expectations: giving employees predictable and regular practice
        :check: Procedural fairness, the procedures and the processes of the firm should be safe
        :check: Distributive fairness, making sure the benefits and the costs are distributed fairly.
      - Legal responsibilities covered
        
        Employment at will in the US, except when there is other contractual obligations, covenant of good faith, violation of public policy
        
        Sexual harassment and discrimination is illegal
        
        Legally protected classes, no discrimination based on those is allowed and reasonable accommodations should be made
        
        Employer vs independent contractors have different obligations and benefits
      - Religion
        Employers have the right to maintain religious neutrality in the workplace. However they must make reasonable accommodations unless those pose undue hardship on the employer.
        International perspective may differ. There is a set of questions that help evaluate the cases of religion
      - Economic responsibilities
        :check: fairness: individual level, across. employees, and the importance to be seen as fair.
        :check: Following due process in cases of harassment
        Employees will reward the employer with better productivity when treated well, so it is a positive sum game.
    - - Entity vs property view of the corporation
        :check: While previously the view by M.Friedman was that manager should max shareholder value (property view), now the view is entity view in which managers should maximise stockholder value.
      - Common law fraud
        :check: The definition of intentional fraud: False representation of a material fact knowingly made with intent to deceive which is reasonably relied on to the injury of the deceived party
      - Fiduciary duties:
        :check: Some relationships do have fiduciary duties and some do not. Check the slide and do not assume that every relationship has a fiduciary duty.
        :check: The is no fiduciary duty to employees, customers, or society
        :check: Fiduciary duty does not include an absolute duty to maximise the stock price except when the company is being sold and revlon duties are triggered.
        
        Candor and disclosure
        It is about the disclosure of MNPI when required (visit slides). Failure to disclosure (silence) when required is considered breach of candor duties.
        Includes:
        :check: Disclosure of potential conflicts of interest
        :check: Prohibition on insider trading (disclose or abstain from trading)
        :check: Accuracy of material facts and plans in public and private statements
        
        Care and diligence
        It is about the duty to exercise diligence and good degree of care.
        :check: The business judgement rule vs the gross negligence rule. The process of decision making should be sound and diligent (gross negligence is accepting tender offer that grossly undervalues the company in the presence of much better alternatives)
        
        Loyalty and safe restraint
        :check: Duty to protect and promote the interests of the beneficiary, duty to refrain from pursuing personal advantage at the expense of the beneficiary (e.g., the corporation or its shareholders, and partners in partnership), duty of “undivided loyalty” limits fiduciaries’ ability to secure personal advantage from their position and prohibits them from benefitting at the expense of their beneficiaries
        :check: Includes: Corporate opportunities, Fair dealings, Insider trading.
        
        Insider trading is trading on MNPI. It arises from the existence of a relationship giving access directly or indirectly to MNPI and the unfaireness of taking action based on the MNPI.
        Multiple theories when MNPI happens: Traditional theory, Temporary insiders, Tippers and tippees, Misappropriation theory, Tender offer.
        Personal gain can be non-monetary (RG case).
        Firms and managers are held liable if they fail to prevent insider trading (Broad Liability), when accused it has to demonstrate effort made to prevent insider trading and evidence that refutes that trading happened on MNPI
    - - Capability asymmetry
        The law here places more liability on the companies because usually they are more capable than the customer. This is exhibited in:
        :check: Strict liability for defects
        :check: Customer protection laws being more customer oriented
        :check: Other applications like companies being liable for 3rd party actions, like data breach
      - Predatory practices
        Included selling predatory products and using predatory practices.
      - Information asymmetry
        Companies have better information about their products compared to their customer. There is two worlds in regards to liability here, the caveat emptor, and caveat venditor. I should recognise the situation I am in and discuss.
    - - The starting point is that companies have duty not to harm. In the case that harm happens there is three next steps:
        
        Identify the harm: What is the type of the harm, and who is/are the victims
        
        Determine responsibility: Causality, complicity, and capability
        
        Think about the business response to the harm caused: The business leader can respond by refraining from causing further harm, Remedying the harm, and Regulating the harm.
        The role of the business: Business as usual, bystander, business as innovator, business as activist.
      - The social responsibility of business
        Think about the ways in which business can interact with society and institutions and how it should do so