Midterm exam Essay Example | Topics and Well Written Essays - 2500 words

Midterm exam - Essay Examplea) Joseph Johnston argues that the failures in corporate governance and cover version level scandals indicates that the fiduciary principle does not really help to ensure that managers seek the best divert of their stakeholders (25).Johnston argues on the basis of the conflict of stakes that is so rife in organizations. This is because most managers and directors seek to fiddle their profit motives and since they ar often assessed on the basis of their ability to attain profitability, most directors are abandoned to find ways and means of cutting corners and cheating some stakeholders.A stakeholder is a person who affects and/or affected by an organizations activities (Freeman 29). This include a wide variety of heap including employees, consumers, suppliers, financial institutions, government agencies amongst others. These people have various demands and expectations from the organization and its directors. And due to the reality that directors ar e expected in practice, to generate profits, directors are wont to do illegal things that allow for lead to higher profitability. They are also likely to reduce other peoples claims and legitimate needs in order to attain high profitability.From another angle, managers and directors want to keep in the life-threatening books of shareholders and guarantee shareholders expectations of higher dividends. They are therefore likely to present misleading reports that will allow them to remain in office as directors. Thus, the fiduciary duty of operating in good faith is often missed and directors use ways and means to attain results.b) To a large extent, I agree with this assertion. This is because in reality, a director works under so many constraints. And if that is the case, a director will be forced to do things that might not be in the best interest of everyone.From another perspective, it is practically impossible for a manager or director to meet all the expectations and demands of stakeholders. So a director will have to