Saturday, August 3, 2019
Wall Street-Financial Markets and Management in Corporations: Examined :: Wall Street Film Movies Films Papers Business
Wall Street: Financial Markets and Management in Corporations The film Wall Street is a movie that portrays the corruptness that can exist on Wall Street. Bud Fox is trying to establish a name and a living for himself, and thus he has the endless task of trying to increase the number of clients that he represents. In the end he is taken by the prospect of becoming rich, and it would seem that to do this requires illegal actions, such as insider trading. It is quite amazing how this can, almost overnight, lead to great riches and power. Bud Fox was making an "honest" living; that is until he finally is able to establish a relationship with Gordon Gekko-a so-called financial wizard. While this film deals primarily with the concept of "Insider Trading" and how it affects the stocks and their values, I would like to present in this paper ideas and concepts that I learned in a previous class that extend beyond just the ideas of insider trading and expand more broadly to discuss the unethical problems that can occur within a corporation in general (not just on wall street), when there is separation of management and ownership. This is important to be aware of in a capitalist society where many people work for other people, and or are in charge of many other people as well. It constantly causes people to question the systems in place and what can be done to eliminate these potential problems and unethical actions. The ultimate test of corporate strategy is whether it creates economic value for shareholders. Yet there are quite a few problems which can arise and interfere with this agenda. The agency problem that arises from the separation of ownership and management in the modern corporation can lead to conflict between the objectives of owners and the objectives of managers. The manager's goal should be, and in fact the manager's job is, to maximize shareholder wealth. Managers work for the shareholders, since shareholders are essentially partial owners of the corporation that they have purchased stock in. Stockholders invest their money because they hope that the value of their investment will grow. They want to increase their wealth as much as possible. (Hickman 11) Unfortunately, claimants (shareholders) oftentimes have difficulty determining how well management is actually doing because of the existence of information asymmetry- in a sense lack of information.