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BUS 250 wk 4 Disc. 2 replies (DO NOT CHANGE THE PRICE) IF YOU DO I WILL NOT SEND A HANDSHAKE.

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Week 4 - Discussion 2

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In your own words, yet citing the text, define shareholder activism and stock screening. Defend your position using at least one example. Respond to at least two of your classmates’ postings.

#3 Hayden Green

Jul 30, 2017Jul 30 at 11:44am

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In my own words I would define shareholder activism as, “Shareholders taking deliberate and intentional steps to bring ethical and moral balance to what appears to be unethical or immoral situation.” Are shareholders always correct? I would say no. But at times corporations do break the law, commit unethical behavior, treat employees or customers unfairly, etc.

Salary and pay is a sensitive topic. I personally love the free market. If a corporation can make large sums of money and wants to pay their leaders well, then that is their right, and I encourage it. I think the issue is when you have employees making so little for so hard of work. Then on the flip side board directors, CEO’s, and management making huge sums compared to their work load. However CEO’s and management boards work very hard. They have a lot of responsibility; people with those burdens should be paid well. Quite frankly, corporations are free to do that. The idea and hope of the free market is that the people will realize if it is unfair or unethical and seek work elsewhere or seek to influence the corporations to do what is right. As our text states, “Shareholder actions may include lawsuits or negative media campaigns that are intended to influence corporate leaders.” (Hammond, S.C., & Christensen, L.J. 2016 p. 3.5) Shareholders have power to influence changes.

We are always competing. Where one corporation fails to take care of its shareholders, another corporation will step in and compete against them. Corporations should be motivated to follow good ethics and morals because it is the right thing to do. I would love to see more CEO’s leading by example and voluntarily taking pay cuts to help their employees out in times of companywide or economic financial hard ships. But if they choose to lead unethically and live greedily, then the hope is that their competitors in the free market will compete with them and in a very real way take their shareholders from them by offering better paying jobs, and investment returns. However I understand this does not always happen and at times government regulations are needed, as well as legal accountability.

In my own words I would define Stock Screening as, “Stock holders attempting to influence corporations through social responsibility.” This can be both good and bad. Just because a large portion of society believes a certain product or way of producing a product is best, does not mean that it actually is. However the people want to know that the corporations they are investing in are making good ethical decisions. Our text stated that “…1 of every 9 dollarsunder investment is invested in an SRI fund; the total size of the SRI market is in excess of $4trillion.” (Forum for Sustainable and Responsible Investment, 2016) This is a lot of money and this idea of Social Responsible Investing is gaining traction. If corporations want to stay relevant in the market they must take careful consideration on how and why they invest in certain products. On a small level I see this happen a lot at farmers markets. People in my town flock to the “natural” and “organic” food stands. The people want whole and healthy foods. On a small scale they are driving local farmers to produce foods with no chemicals and preservatives. This trend is catching on in all the groceries stores now to. Larger and larger sections are being dedicated to “organic” foods.

Hammond, S. C., & Christensen, L. J. (2016). Corporate and Social Responsibility: Road Map for a Sustainable Future

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#4 Joshua Stewart

TuesdayAug 1 at 8:53pm

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Shareholder Activism

As I understand the concept of shareholder activism is a way that people who own shares in a publicly traded company can galvanize as a group and work towards change. One single shareholder owns the company, but as a group they are powerful. They can demand dialog and start a transition into corporation reform. Hammond and Christensen (2016) define shareholder activism as “a strategy for shareholders to influence the decisions of the corporate board and other leaders of the firm” (sect. 3.5, p.74).

Stock Screening

Stock screening is a way for investors to choose what companies they want to invest in. In stock screening, potential stockholders can buy into socially responsible businesses and avoid businesses that don’t take corporate social responsibility seriously. Hammond and Christensen (2016) classify stock screening as “socially responsible investing (SRI) that describes investors who choose stocks based on environmental or social issues” (sect 3.5, p.75). Stock Screening allows investors to punish companies they don’t feel fall in that socially responsible category, this can affect drive down demand for the stock and lower pricing.

An example is Bed Bath & Beyond they were taken to task by shareholders for the number of products they sold that used chemicals that were considered toxic (Green Century Funds, 2014, “Shareholders Successfully Urge Bed Bath & Beyond* to Reduce Toxic Chemicals”). Shareholders were able to pressure Bed Bath & Beyond to remove those products. This action shows the power shareholder activism has. Bed Bath & Beyond decision indicates that they are willing to take responsibility for the products they sell and that is possible for the company and its customers.

Best regards,

Joshua Stewart

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