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Principles of finance ah la shmoop up some illustrative examples

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of ethical and fiduciary conflicts Okay let's take a look

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at a few examples in the world of business ethics

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and fiduciary conflicts The're the cfo one sunday in the

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middle of his back swing on the seventh hole your

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c e o is struck by lightning Shocking He flies

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over the sand trap and lands in the lake When

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he emerges he can only say huh He believes he

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has been saved and he instructs you to be certain

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your company only buys product from devout christians suppliers Those

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supplies cost twenty percent more than supplies you could buy

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from heathens Should you buy with jesus Answer no your

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company sells telephone handsets Jesus may or may not be

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involved but you could inform your shareholders that god would

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want ah higher profit margin business And yes there will

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be times you will conflict with your ceo And if

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you do remember the hierarchy shareholders elect the board of

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directors the board of directors hires the ceo and while

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the ceo pretty much hires everyone else including you the

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cfo who then hires inside of your vertical of finance

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iaea treasurer a controller a bookkeeper and so on and

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eventually range for the hiring of your own auditors who

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confirmed to the government that the profits you say you've

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achieved are in fact the real profits you've actually achieved

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well hopefully you have the relationship with the people above

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to talk things out If there's ever a conflict if

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you don't well you know sea glassdoor Dot com Cos

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often want to be charitable They like to donate money

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to the causes of senior management Good idea bad idea

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Well answer usually bad idea management represents shareholders and in

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a public company while they're often millions of shareholders how

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can a handful of charities represent the wishes of millions

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Shouldn't the decision be put back to them that the

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company has simple much extra cash that it's looking at

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donations to make Well why not have it pay a

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special dividend and just give the cash back to the

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people who own the company I e the shareholders When

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did management become experts and charitable giving And isn't it

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often the eagle of the ceo who likes being stroked

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by the charity's she's funding Maybe the gifts are sincere

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but why is it her job to decide where her

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millions of shareholders excess cash profits should go And yes

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there are times that charities are a good idea and

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yes of course hearts are often in the right place

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in making donations to good causes But that's not the

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question Here the question revolves around whose right it is

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to make those donations all right Your nostril trimmers retail

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on amazon for twenty bucks Amazon keeps eight dollars and

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you the manufacturer keep twelve That twelve dollars is your

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wholesale price Your trimmers are made by highly unionized workers

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in chicago and they cost you ten dollars each to

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make If you moved manufacturing to beijing well you could

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make them for seven dollars instead of ten Should you

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move well if you're only looking at profits Yeah it's

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ah highly politically charged issue american workers Losing jobs is

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not something any politician wants to talk about and soon

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robots will be replacing human We're hearing well that'll be

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a big deal to should you consider loss of american

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jobs when you think about suppliers Not if you're working

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for shareholders with an unbiased shareholder wealth maximising at on

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and you should know where that maximizing hada lot because 00:03:47.196 --> [endTime] that thing is really stylish

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