Student ID : CGSSO00015316 Student Name : Abdisamad Abdullahi Abdulle Course Code : BMCF5103 Course Name : Corporate finance Program : Master Of Business Administration MBA Semester : Five Assignment : Answers Facilitator : Ibraahim Moh’ud Hamud Date due : 12 Nov, 2014 Submission Date : 12 Nov, 2014
1.0 QUESTIO N ONE
1.1 Introduction 3 1.2 Value maximization and other goals
3 1.3 Customer and employee safety 4 1.4 General goodness of society 4 1.5 Conclusion 5
2.0 QUESTION TWO 2.1 Introduction 6 2.2 Corporate ownership
6 2.3 Agency problem 8 2.4 Conclusion 8
3.0 QUESTION THREE 3.1 Introduction 9 3.2 The In an opposite statement, Arjoon (2005) argues that many executives were out-of-touch on ethical issues when they maximize the firm value; either they were too busy or because they sought to avoid responsibility. 1.5 CONCLUSION (THE ANSWER) In conclusion, an argument can be made either way. It can be yes because when it comes to maximize the value of stock in market economy everything is priced and there are some illegal and ethical behaviors. On the other hand, it can be no because the bottom line is that the goal of any company should be to maximize shareholder value within legal limits. Many firms spend more money attempting to prove how they reflect all of the stakeholders and not just the shareholders but most would not do this unless it paid for them to do so. For example, firm pays 3 million USD to protect the environment and in return the firm gets 2.5 million profits and this creates a dilemma in the firm’s decision making process. QUESTION TWO Corporate ownership varies around the world. Historically, individuals owned the majority of shares in public corporations in the United States. In Germany and Japan, however, banks, other large financial institutions and other companies own most of the stocks in public corporations. Do you think the agency problems are more likely to be more or less severe in Germany and Japan than in the United States? 2.0 ANSWER 2.1 INTRODUCTION The corporate form of organization and its ownership has many differences
