The board of directors is responsible for overseeing and exercising corporate powers and certifying the company’s business affairs while managing the goals and objectives for long-term interests of the shareholders. Organizational Annual Report and SEC Filing The SEC requires publically traded companies to file annual financial reports, and these reports are open to the public. Investors are interested in these reports because it helps in determining the financial health of a company. As a means for providing guidelines, principles, and objectives for the financial markets in the United States, the Sarbanes-Oxley Act of 2002 enhances the SEC’s roles for reforming corporate accountability. This also includes establishing a private-sector regulator to oversee the auditing profession to combat accounting fraud, and enhancing financial disclosures.
March 26th, 2012 To: President of LJB Company From: Erica Sylvester Topic: Discussion of Internal Controls-New Internal Controls Mandated if Company Goes Public, Current Good Practices and Suggested Improvements 1. New Internal Controls required if company decides to go public: a. If your company decides to become a publicly traded entity, then you will fall under the Sarbanes-Oxley Act (SOX) that requires for all traded U.S. corporations to maintain a system of internal controls that are ensured by executives and the board of directors to be reliable and effective. Independent and outside auditing will be required to check and attests to the adequacy and stringency of the internal control systems (1). Under SOX, your company will also be required to track your employees’ degrees and certifications to ensure that they meet the requirements of their job.
* Mini Case (p. 45) a) Why is corporate finance important to all managers? All managers are mandated with a goal to improve the businesses bottom line. Successful corporations have two main goals they must meet to stay in business. The first goal is “identifying, creating, and delivering highly valued products and services to its customers.” (Brigham) The second goal is to generate “enough cash to compensate the investors who provided the necessary capital.” Behind every managerial action, the manager must ally every action they take with meeting the above two goals. In order to evaluate the success of those decisions, managers must be able to analyze their decisions and fully understand the impact past decisions will have on the past, present, and future health of the company.
To survive in today’s market, corporate culture is essential and must have the longevity to withstand corporate compliance because without a clear conscience, the government will shut the company down. McBride Financial Services Incorporated (MFSI) is discovering that corporate compliance is not as easy as it seems. MFSI is attempting to break into the mortgage business and is beginning a financial relationship with an investment firm called Beltway Investments. Beltway Investments wants to ensure that Hugh McBride is ready for this relationship by inspecting his business processes. McBride will need to ensure that changes are made, compliance is researched and built-in the strategic plan, and the shareholders will be satisfied with the new MFSI.
Cost of capital can help define the acceptability of investment opportunities. Besides, the cost of capital can scheme the corporate finance arrangement. Generally, the best way for designing the corporate finance structure is based on information of changing of the capital market. So, manager can figure out information like accounting reports and their cost of capital to market. By using the information, manager can use cost of capital for restructure the market price and earning per share in order to bring advantage for company.
Abstract This paper is discusses the Milton Friedman Theory and how it applies corporations and the government. It will also discuss the responsibilities of firms and the government and whether or not they play a role in the expansion the Friedman Discussion. Milton Friedman Goal of the Firm Milton Friedman is a noble prize winning economist whose philosophy on corporate social responsibility (CSR) has shaped the business world today. Friedman believed that businesses only social responsibility is to utilize resources and engage in activities that would maximize profits without the use of deception or fraud while conforming to the basic rules of society (Friedman, 1970) . Executives are hired to act as fiduciary agents of their stockholders for the purpose of increasing wealth (Smith, 2003).
What are agency problems? * Occurs when managers act in their own interests and not on behalf of owners (stockholders) What is corporate governance? Corporate governance is the set of rules that control a company’s behavior towards its directors, managers, employees, shareholders, creditors, customers, competitors, and community. d. What should be the primary objective of managers? * The primary objective should be shareholder wealth maximization.
Thus, if an entity has a “stake” in a corporation, managers are more likely to view that stake as legitimate. The second reason for using the word “stakeholder” is that it deliberately sounds like the word “stockholder” (or “shareholder”) which is meant to create a sense that both terms are equal and to be taken seriously in the same way (Newton & Ford, 2007). Stakeholder Theory Stakeholder theory has been identified by scholars as a prime conceptual framework for reviewing Corporate Social Responsibility (CSR) (Jamali & Mirshak, 2007) and managerial responsibility impacting a corporation and societal well-being (Donaldson & Preston, 1995). A review of the literature pertinent to the relationship between CSR and stakeholder theory
Executive summary The aim of this report is to analyse Tesco’s strateiesy both in corporate level and business level. The report will begin with the background information in Tesco, then the overall business will introduce Tesco’s current business situation, competition, operation and important issues. Secondly, the advantages and problems of product – diversification strategy are formulated. Followed by the ways of diversification, Tesco also made good use of cost leadership strategy and differentiation. Following the corporate strategies and based on relevant strategic management theories and concepts, this report will analyse the company’s current strategies on expanding in the US market.
What is the right cost of capital for the various Equity options? Measure and explain the cost of capital for each equity option. 4. Now imagine you are HPI’s investment banker and you are proposing an ADR on the NYSE. You have to convince HPI’s bearer of the price at which they should issue the shares?