A RESPONSE TO Kenneth Silver (2019), “Modern Portfolio Theory and Share- holder Primacy”, Bus Ethics J Rev 7(6): 34–39, https://doi.org/10.12747/bejr2019.07.06
Kenneth Silver (2019) criticizes our (Sollars and Tuluca 2018) use of the Capital Asset Pricing Model (CAPM) to determine the return on investment that is deserved by shareholders, and suggests shareholder primacy follows from the principal/agent model, rather than a concern for risk. We argue that Silver has misunderstood CAPM and our use of it, and that, under current law, more is required from articles of incorporation or corporate bylaws for the principal/agent model to apply to corporations.
To download the full PDF, click here: Sollars and Tuluca on Silver
Gordon G. Sollars is an associate professor of management in the Silberman College of Business at Fairleigh Dickinson University, with interests in shareholder liability, worker exploitation, and product liability.
Sorin A. Tuluca is a professor of finance in the Silberman College of Business at Fairleigh Dickinson University, with interests in various aspects of corporate finance, corporate governance and interactions between financial markets and real activity.
The Implicit Morality of the Market Is Consequentialist, by Marc Cohen and Dean Peterson
A COMMENTARY ON Joseph Heath (2019), “Is the ‘Point’ of the Market Pareto or Kaldor-Hicks Efficiency?,” Bus Ethics J Rev 7(4): 21–26, https://doi.org/10.12747/bejr2019.07.04
Joseph Heath states that our paper “misinterpret[s]” and so misrepresents his account. The present Commentary corrects the record. Our paper (Cohen and Peterson 2019) outlined Heath’s account on his own terms; it explained that Heath distances himself from consequentialism. But then we argued that Heath is mistaken and so offered a repaired version of the market failures approach. Our central concern, in the original paper and in this short Commentary, is showing that the economic argument for markets is at the same time ethical, and then being more precise about the ethical consideration that does the work.
To download the full PDF, click here: Cohen & Peterson on Heath
Dean Peterson is an Associate Professor of economics and Associate Director of the University Honors Program at Seattle University. His teaching and research focus on the history of economics.
Marc A. Cohen is an Associate Professor at Seattle University in the Department of Management and the Department of Philosophy.
A COMMENTARY ON Matthias Hühn and Claus Dierksmeier (2016), “Will the Real A. Smith Please Stand Up!” J Bus Ethics 131(1): 119–132.
Hühn and Dierksmeier argue that a better understanding of Adam Smith’s work would improve business ethics research and education. I worry that their approach encourages two scholarly sins. First, anachronistic historiography in which we distort Smith’s ideas by making him answer questions about contemporary debates in CSR theory. Second, treating him as a prophet by assuming that finding out what Smith would have thought about it is the right way to answer such questions.
To download the full PDF, click here: Wells on Hühn & Dierksmeier
Thomas Wells is an assistant professor of philosophy at Tilburg University in the Netherlands. His research and teaching focuses on ethics, especially ethical issues in business, capitalism and the methodology of economics.
A COMMENTARY ON Gordon G. Sollars and Sorin A. Tuluca (2018), “Fiduciary Duty, Risk, and Shareholder Desert,” Bus Ethics Q 28(2): 203–218, https://doi.org/10.1017/beq.2017.47
Shareholders assume risk by investing. Sollars and Tuluca (2018) argue that while this does not justify a managerial policy of shareholder wealth maximization, it does justify compensating shareholders at the often- calculated cost of equity—the cost that investors require given the level of risk they assume. Here, I show that this can be unfair if the cost of equity is unfair. I then show how shareholder wealth maximization as a managerial imperative is better justified on other grounds.
To download the full PDF, click here: Silver on Sollars and Tuluca
Kenneth Silver is an Assistant Professor in Business Ethics within Trinity Business School at Trinity College Dublin, The University of Dublin.
A RESPONSE TO Daniel Sportiello (2019), “MacIntyre and Wyma on Investment Advising,” Bus Ethics J Rev 7(1): 1–6,
Daniel Sportiello argues that my support of financial planning as a MacIntyrean practice fails because I have misunderstood the concept of internal goods, and because financial planning then has no internal good at all. Here, I rebut those charges.
To download the full PDF, click here: Wyma on Sportiello
Keith Wyma is professor of ethics at Whitworth University in Spokane, among other things teaching Business Ethics and coaching the school’s three-time national champion Intercollegiate Ethics Bowl team.
A COMMENTARY ON Jeffrey Moriarty (2019), “On the Origin, Content, and Relevance of the Market Failures Approach,” J Bus Ethics: (first online 17 January 2019) 1–12, https://doi.org/10.1007/s10551-019-04106-x
Moriarty argues that the Market Failures Approach (MFA) to business ethics is inapplicable to “real world” problems, because it treats “market failure” as a failure to achieve Pareto efficiency. Depending upon how it is applied, Pareto efficiency is either trivially easy to satisfy or else so demanding that no real-world market could ever satisfy it. In this Commentary, I argue that Moriarty overstates these difficulties. The regulatory structure governing markets is best understood as an attempt to maximize the number of Pareto-improving exchanges that occur. There is no reason to think business self-regulation cannot be guided by the same normative-conceptual framework.
To download the full PDF, click here: Heath on Moriarty’s Critique
Joseph Heath is a professor in the Department of Philosophy at the University of Toronto.
See also, in BEJR, these pieces related to Prof Heath’s work:
A COMMENTARY ON Etye Steinberg (2017), “The Inapplicability of the Market- Failures Approach in a Non-Ideal World,” Bus Ethics J Rev 5(5): 28–34, http://doi.org/10.12747/bejr2017.05.05
Etye Steinberg has recently raised a problem for Joseph Heath’s Market Failures Approach. In this paper we consider a response by Heath. We argue that Heath’s response not only leaves the original problem intact, but also raises a second one, analogous to stakeholder theory’s so-called “identification problem.”
To download the full PDF, click here: Repp and Contat on Steinberg
Charles Repp and Justin Contat are Assistant Professors of Philosophy at Longwood University.Business at Creighton University in Omaha Nebraska.