Business Law, Public Responsibility, and Ethics Commons^™

Berle And The Entrepreneur, Charles R.T. O'Kelley

Seattle University Law Review

In the first and last four chapters (“the Five Chapters”) of The Modern Corporation and Private Property, Adolf Berle, Jr. describes in sweeping terms a fundamental transformation of the American economy. . . . Writing more than ten years before Berle, another seminal scholar, Frank Knight . . . developed a theory of the entrepreneur as part of his larger effort to more carefully explain the theoretical underpinnings of a free-market economy. . . . Given Knight’s prominence and the fact that Knight apparently reached dramatically different conclusions than did Berle concerning the consequences flowing from separation of ownership …

The Birth Of Corporate Governance, Harwell Wells

Seattle University Law Review

Part I of this Article briefly examines the concept of “corporate governance” and argues for dating the concept’s origins to the debates of the 1920s. Part II then moves on to examine early scholarly and popular discussions of the separation of ownership and control. After surveying the historical developments that produced the recognizably modern corporate economy around the turn of the century, it examines early scholarly and popular discussions of the separation of ownership and control, focusing on three major thinkers, Louis D. Brandeis, Walter Lippmann, and Thorstein Veblen. It argues that, while each of these authors examined the separation …

Exploring Sustainability Practices And Reporting At Musgrave Group: A Case Study Of An Irish Private Company., Rebecca Maughan, Brendan O'Dwyer

Conference papers

The purpose of this paper is to present the findings of a case study of a large Irish company, Musgrave Group, which has been engaged in sustainability practices and reporting since the late 1990s. In doing so the paper provides an in-depth account firstly of the internal motivations for the company’s engagement with sustainability practices and reporting and secondly of the process through which the sustainability practice gained internal support and began to be integrated into the day to day activities of the company. The case study of the company involved a series of interviews with key participants in the …

Faith-Based Entrepreneurship, M. Yaqub Mirza, Miles K. Davis

New England Journal of Entrepreneurship

Interview of M. Yaqub Mirza by Miles K. Davis. Dr. Mirza attributes both his personal and business success to following Islamic principles.This interview outlines the Islamic principles he uses to guide his investment in new ventures and how those same principles shape his management style and attitude toward corporate social responsibility.

Legal And Ethical Issues Associated With Employee Use Of Social Networks, Gundars Kaupins, Susan Park

Management Faculty Publications and Presentations

Social networking sites such as Facebook and Twitter can help employees enhance a company’s marketing, recruiting, security, and safety. However, employee’s use of social networking sites and employers’ access of those sites can result in illegal and unethical behavior, such as discrimination and privacy invasions. Companies must gauge whether and how to rely upon employees’ use of personal social networking sites and how much freedom employees should have in using networks inside and outside of the companies. This research summarizes the latest legal and ethical issues regarding employee use of social networks and provides recommended corporate policies.

Tracking Berle’S Footsteps: The Trail Of The Modern Corporation’S Last Chapter, William W. Bratton, Michael L. Wachter

Seattle University Law Review

Readers game enough to work through all three hundred pages of The Modern Corporation and Private Property looking for insights on corporate law today encounter two, apparently contradictory, lines of thought. One line, set out in Books II and III, resonates comfortably with today’s shareholder-centered corporate legal theory. Here the book teaches that even as ownership and control have separated, managers should function as trustees for the shareholders and so should exercise their wide-ranging powers for the shareholders’ benefit. The other line of thought emerges in Books I and IV, where The Modern Corporation encases this shareholder trust model in …

Rethinking The Separation Of Ownership From Management In American History, Kenneth Lipartito, Yumiko Morii

Seattle University Law Review

In <em>The Modern Corporation and Private Property</em>, Adolf Berle and Gardiner Means would use AT&T as a prime example of what they saw as a dangerous new trend, the replacement of ownership-based capitalism with giant corporations controlled by a small group of propertyless managers. Indeed, AT&T became Berle and Means’ favorite example. . . . As we shall see, however, the claim that AT&T was a leading example of the separation of ownership from management is incomplete. More importantly, the common interpretation of Berle and Means’ work is mistaken, placing the emphasis incorrectly on the number of shareholders and reading …

Berle’S Vision Beyond Shareholder Interests: Why Investment Bankers Should Have (Some) Personal Liability, Claire Hill, Richard Painter

Seattle University Law Review

This essay, published in a symposium on the work of Adolf Berle, approaches the Berle-Dodd debate from the perspective that corporate managers have responsibilities beyond pursuing the interests of shareholders. Stock based executive compensation, designed to align managers’ interests with those of shareholders, has, in the investment banking industry in particular, failed to avert, and may have caused, managers (in this case, bankers) to take excessive risks that in the present financial crisis inflicted great damage on creditors and on society as a whole. We describe here the broad outlines of a proposal that we will discuss in future publications …

Enumerating Old Themes? Berle’S Concept Of Ownership And The Historical Development Of English Company Law In Context, Lorraine E. Talbot

Seattle University Law Review

This paper offers some tentative suggestions as to why Berle’s work has been read and interpreted so selectively in the United Kingdom. I suggest that this must be partly attributable to the historical developments in English company law that entrenched the notion of shareholder ownership claims. Specifically, unincorporated associations’ normative values—that members are owners and there is no distinction between small organizations with no share dispersal and large organizations with wide share dispersal—have a continuing influence on this entrenched notion of shareholder ownership claims. First, I provide an overview of the origins of English company law. Next, I address how …

Monitoring To Reduce Agency Costs: Examining The Behavior Of Independent And Non-Independent Boards, Anita Anand, Frank Milne, Lynnette Purda

Seattle University Law Review

Berle and Means’s analysis of the corporation—in particular, their view that those in control are not the owners of the corporation—raises questions about actions that corporations take to counter concerns regarding management’s influence. What mechanisms, if any, do corporations implement to balance the distribution of power in the corporation? To address this question, we analyze boards of directors’ propensity to voluntarily adopt recommended corporate governance practices. Because board independence is one way to enhance shareholders’ ability to monitor management, we probe whether firms with independent boards of directors (which we define as boards with either an independent chair or a …

Pedagogical Strategies For Teaching Moral Minimalism, Richard Mcgowan

Scholarship and Professional Work - Business

In 1986, Stephen Satris’s article, "Student Relativism," means to "offer analysis of, and suggest some methods for dealing with, a quite particular and peculiar problem in teaching philosophy…I speak of the problem of student relativism." (Satris, 1986, p. 193) The problem has not gone away.

However, psychological research suggests that the problem of relativism, a problem especially critical for teaching business ethics (or any other class in applied philosophy) is not insolvable. This paper, extending earlier work by R. McGowan, provides a brief account of research by Lawrence Kohlberg and William Perry on the structure of thought exhibited by students, …

Securities Intermediaries And The Separation Of Ownership From Control, Jill E. Fisch

Seattle University Law Review

The Modern Corporation & Private Property is a paradigm-shifting analysis of the modern corporation. The book is perhaps best known for the insights of Berle and Means about the separation of ownership from control and the consequences of that separation for the allocation of power within the corporation. The Berle and Means story focuses on the shareholder as the owner of the corporation. Berle and Means saw the mechanism of centralized management—in which the shareholder retains the economic interest but not the control rights associated with ownership—as threatening the conception of shareholder interests in terms of property rights. In particular, …

The Modern Corporation As Social Construction, Mark S. Mizruchi, Daniel Hirschman

Seattle University Law Review

Classic works, Mark Mizruchi and Lisa Fein argued, share a particular fate. Authors often cite classic works without reading them—or without reading them carefully. . . . Yet perhaps no single work fits the above description better than one of the most important books on the large corporation ever published: Adolf Berle and Gardiner Means’s The Modern Corporation and Private Property. One can speculate that few works in the social sciences have been as often cited and as little read. As a consequence, we would expect The Modern Corporation to be a good candidate for either selective interpretation or …

International Movement To Deter Corruption: Should China Join?, Paul D. Carrington

Faculty Scholarship

Global concerns over the corruption of weak governments by firms engaged in transnational business are the source of an international movement that emerged in 1997. Special concern is presently directed at the weakness of enforcement of laws enacted in recent times to deter corrupt business practices in international trade that were enacted in response to that movement. One cause of weakness in law enforcement is the failure of China to share actively in those concerns and the efforts to address them. This essay will briefly record steps taken in other nations to address the concerns and the limited effectiveness of …

Corporate Sustainability And The Recession: Firms' Strategy Response In A Financial Crisis, Carolyn M. Campbell

CMC Senior Theses

As the modern world deals with an increasing number of environmental and social crises, corporate sustainability is becoming ever more imperative for business. There is broad agreement that profit maximization can no longer be the exclusive goal of a company, with firms working to align environmental, social, and financial performance. Companies have demonstrated a wide variety of experiences in regards to the financial crisis and its effects on corporate sustainability. While some firms experienced serious setbacks in achieving environmental and social goals others firms claimed to have been ramping up sustainability efforts during the recession. However, most firms report that …

Corporate Power In The Public Eye: Reassessing The Implications Of Berle’S Public Consensus Theory, Marc T. Moore, Antoine Rebérioux

Seattle University Law Review

We analyze Berle’s overall corporate governance project in accordance with what we see as its four core sub-themes: (A) the limitations of external market forces as a constraint on managerial decision-making power; (B) the desirability of internal (corporate) over external (market) actors in allocating corporate capital; (C) civil society and the public consensus as a continuous informal check on managerial decision-making power; and (D) shareholder democracy (as opposed to shareholder primacy or shareholder wealth maximization) as a socially instrumental institution. We seek to debunk the popular misconception that Berle’s early work was a defense of the orthodox shareholder primacy paradigm …

Social Networking And The Perception Of Privacy Within The Millennial Generation, Andra Gumbus, Frances S. Grodzinsky, Stephen J. Lilley

WCBT Faculty Publications

Has technology caused a generational divide between current college age users (Millennial Generation) who have no problems posting intimate details of their personal life on the Web and more traditional older users who seem to value privacy? This paper presents the results of a survey of 251 university students and follow-up focus groups on the topic of the perceptions of social networking and privacy. We will use Facebook as an example of social networking, and review attitudes about privacy and control over personal information among traditional and non-traditional college age users and light and heavy users of social networking sites.

Giving Voice To Values: How To Speak Your Mind When You Know What's Right (Book Review), Andra Gumbus

WCBT Faculty Publications

Book review by Andra Gumbus.

Gentile, Mary. Giving Voice to Values: How to Speak Your Mind When You Know What's Right. New Haven: Yale University Press, c2010.

ISBN 9780300161182

Backdated Stock Options Ownership Impact On The Corporation, Management, & Shareholders, Karen Cascini, Alan Delfavero

WCBT Faculty Publications

In the post-Sarbanes-Oxley Act (SOx) world, there has been an unprecedented crackdown on fraudulent activity occurring within corporate America. During recent years, many companies have granted stock options to their executives and employees as part of compensation packages. While the issuance of stock options as a component of compensation is considered to be a legal practice, corruption has taken this corporate resource to unlawful heights. Recently, numerous corporations have been in the news for potentially backdating stock options. Accordingly, the purpose of this paper is to distinguish between legal and illegal aspects of backdating stock options, and to examine the …

Should Individual Investors Use Technical Trading Rules To Attempt To Beat The Market?, Thomas S. Coe, Kittipong Laosethakul

WCBT Faculty Publications

Problem statement: Despite widespread academic acceptance of the Efficient Markets Hypothesis, some stock traders still use technical trading rules in an attempt to beat the market. Approach: This study looked at four trading rules, namely, the arithmetic moving average, the relative strength index, a stochastic oscillator and its moving average. These trading rules compare the relationship of current prices to past price patterns to generate a signal when to buy and sell stocks. The trading rules were tested over the years 2000-2009, a period of time that exhibited bull and bear markets, to determine if traders could actively …