BBA 3210 CSU Unit II Corporations Responsibilities - CEO compensation Paper

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NLQRA2016

Business Finance

Columbia Southern University

Description

According to Fortune magazine, in 1978, chief executive officers (CEOs) of major American corporations earned 30 times the average earnings of the employees of the corporations that they ran. In 2016, CEOs earned 276 times the average earnings of the employees of the corporations that they ran.

Do corporations have ethically responsibilities to their employees that suggest that this kind of CEO compensation is improper? Do corporations have ethical responsibilities to their customers to control CEO compensation?

Textbook:

Kubasek, N., Browne, M. N., Herron, D. J., Dhooge, L. J., & Barkacs, L. (2016). Dynamic business law: The essentials (3rd ed.). New York, NY: McGraw-Hill Education.

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UNIT II STUDY GUIDE Administrative Law, Business Ethics, and Social Responsibility Course Learning Outcomes for Unit II Upon completion of this unit, students should be able to: 4. Demonstrate research skills using all modalities available for legal issues. 4.1 Describe what administrative law is and where it is derived. 4.2 Differentiate between the two principal varieties of agency rule making. 4.3 Classify the limitations placed on agency powers. 4.4 Describe law and its sources. 4.5 Identify the key elements of the judicial process, including the parties involved and the places where disputes are heard. 4.6 Differentiate the various forms of jurisdiction. 8. Analyze business ethics in legal matters. 8.1 Recognize the importance of ethics to business management. 8.2 Discuss ethical scenarios using the WH framework. 9. Explain the need for promoting business social responsibility. Reading Assignment Chapter 2: Business Ethics and Social Responsibility, pp. 13–22 Chapter 4: Administrative Law, pp. 54–71 Unit Lesson Administrative Law Introduction: This unit goes beyond the various sources of law covered in Unit I, including constitutions, laws passed by legislatures, and laws that administrative agencies pass. Understanding administrative law requires knowledge of the creation of administrative agencies, their primary function, and their everyday application. All are very important to a business manager. In brief, administrative law involves the substantive and procedural rules created by administrative agencies— entities created by the legislative branch—to carry out specific duties. These agencies have hearings (agency “trials”) in which an administrative law judge (ALJ) presides over the hearing. An example of the importance of administrative law is the case mentioned in Chapter 4 on page 54. A group of private organizations petitioned the Environmental Protection Agency (EPA) to require that it regulate carbon dioxide from automobile emissions. After hearings and comments from the public, the EPA refused to regulate, saying they did not have the legal authority to do so. The matter was appealed and eventually went to the U.S. Supreme Court. The Bush White House filed an amicus curie brief, arguing that the EPA was attempting to force the automobile industry to reduce emissions. The Alliance of Automobile Manufacturers came to the EPA’s defense, arguing that the EPA as well as the states had no authority to regulate automobile emissions. In a 5-4 decision, the U.S. Supreme Court disagreed, holding that the Clean Air Act authorizes the EPA to regulate greenhouse gas emissions from new motor vehicles in the event that the EPA forms a “judgment” that such admissions contribute to climate change. Moreover, the Court held that the Clean Air Act’s definition of air pollutant includes carbon dioxide. As a result of the Court’s decision, many are now calling for national standards on emissions from automobiles (Massachusetts v. EPA, 2007). BBA 3210, Business Law 1 UNIT x STUDY GUIDE Administrative Agencies: Agencies are created by Congress to do work thatTitle is too specific, burdensome, or outside the expertise of legislative bodies. Enabling legislation specifies the name, functions, and specific powers of the administrative agency. Congress approves passing of this legislation, resulting in a statute that specifies the name, functions, and specific powers of the administrative agency, and the agency is empowered to act. Agencies have three processes to carry out their mandates—rule making (procedural, interpretive, and legislative), the executive power to investigate possible violations of rules or statutes, and adjudication. The EPA case above is an example of the EPA’s interpretation of its own administrative responsibility. The Administrative Procedure Act (APA) passed by Congress is a major limitation on how agencies are run. Prior to this, agencies had the power to decide how they carried out rule making, investigations, and adjudications. Agencies could decide on their own how to make rules, conduct investigations, and hold hearings and trials. The APA established specific guidelines on the formation of rules. Following the formal guidelines of the APA, there are two common types of rules—informal and formal—that agencies can generate. The rules are published in the Federal Register. Agencies primarily use informal rule making. The process of formal rule making is illustrated in Alexis Perez v. John Ashcroft (2002). In this case, the court ruled that all substantive rules (i.e., rules that create law) must be implemented through formal rulemaking procedures established by the APA. Agencies have broad and expansive powers that are kept in check by political, statutory, judicial, and informational limitations. Judicial limitations are arguably the biggest constraint on agency power. An individual or business that believes itself harmed by an administrative rule may challenge that rule in federal court after all administrative procedures are exhausted (Kubasek, Browne, Herron, Dhooge, & Barkacs, 2016). Specifically, the petitioner must do all that is possible within the administrative agency before taking a matter to federal court. In Massachusetts v. EPA (2007), the EPA had resisted regulating greenhouse gases, arguing that carbon dioxide and similar gases are not pollutants under the Clean Air Act, and, therefore, the agency had no regulatory power over them. Ultimately, the Supreme Court decided otherwise and determined the EPA has authority to regulate greenhouse gases as air pollutants under the Clean Air Act. The informational limitations on agencies are defined by the Freedom of Information Act (FOIA), the Government in the Sunshine Act, and the Privacy Act of 1974. These acts serve to provide transparency in government activities, including agencies. Electronic Privacy Information Center v. National Security Administration (2011) determined limits on FOIA requests. There are over 100 federal agencies and countless state agencies. Each state has its own analog of the EPA. The federal EPA delegates authority to each of the state environmental protection agencies for enforcing environmental protection laws. If the state agency fails to enforce these laws using their delegated authority, the federal EPA will enforce them. Business Ethics and Social Responsibility Earl Warren (March 19, 1891–July 9, 1974), American jurist and politician, served as the 30th Governor of California and later served as the 14th Chief Justice of the United States (1953–1969), and in 1962, he stated, “In civilized life, law floats in a sea of ethics” (as cited in Allen, 2006, p. 1). The concepts of business law must be illustrated with real-life examples in order to be meaningful to citizens and institutions. One lesson to learn is that it is not enough to simply memorize the law or court case decisions. It is most important to understand the reason for the law and the practical application of that reasoning. Ethics addresses the issues of right and wrong and the implications for conduct, including the actions of individuals and businesses. Chief Justice Warren’s quote implies a strong connection between law and ethics. The legality of a decision is the minimum standard that must be met. The law both affects and is affected by evolving ethical patterns. BBA 3210, Business Law 2 Ethics is the study and practice of decisions about what is good or right. Business is theGUIDE use of ethics UNITethics x STUDY and ethical principles to understand and solve potential ethical threats in a business Title environment. Every community has its own values—positive abstractions that capture the sense of what is good or desirable. The community has the right to these expectations in regard to business actions within their community. These underlie social responsibility. Understanding the concept of values is necessary to use the who-how (WH) framework for ethical business decisions. Kubasec et al. (2016) described that the WH framework provides practical steps for responding to an ethical dilemma. The W refers to who (i.e., the stakeholders) would be affected. This can be challenging as the interests of one group of stakeholders (e.g., shareholders) may conflict with the interests of others (e.g., customers or future generations). The H refers to how the ethical decisions are made. Often, traditional guidelines, such as the Golden Rule (“Do unto others as you would have done to you"), are used. Guidance is also provided by considering the test of public disclosure—the consequences of the decision becoming public. A third test is the universalization test—if action X is taken, would the world be a better place if others did the same? References Alexis Perez v. John Ashcroft, 236 F. Supp. 2d 899 (2002). Allen, A. L. (2006). Moralizing in public. Hofstra Law Review, 34(4), 1-6. Retrieved from https://law.hofstra.edu/pdf/Academics/Journals/LawReview/lrv_issues_v34n04_i02.pdf Electronic Privacy Information Center v. National Security Administration, 795 F. Supp. 2d 85 (2011). Kubasek, N., Browne, M. N., Herron, D. J., Dhooge, L. J., & Barkacs, L. (2016). Dynamic business law: The essentials (3rd ed.). New York, NY: McGraw-Hill Education. Massachusetts v. E.P.A., 549 U.S. 497 (2007). Suggested Reading The reading below is helpful in expanding your knowledge when completing the Unit II Assignment. This article briefly goes over the Ford Pinto case and the impact it had on Ford and the automobile manufacturing industry. Ford Pinto: A pre law case-study in product liability. (n.d.). Retrieved from http://www.regisuniversity.org/fordpinto-a-pre-law-case-study-in-product-liability/ BBA 3210, Business Law 3
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Running head: ETHICAL RESPONSIBILITY OF ORGANIZATIONS

Ethical Responsibility of Organizations
Name
Institution
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ETHICAL RESPONSIBILITY OF ORGANIZATIONS

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Ethical Responsibility of Organizations
Over the years, mutual interdependence primarily between employees, society, and
businesses has progressively cut into social responsibility as well as the corporation’s ethical
responsibility. Fortune Magazine 1978, argues that CEOs of le...


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