MGMT 230 - 7 Shareholder and Stakeholder Capitalism

These flashcards cover the key concepts related to stakeholder and shareholder capitalism, fiduciary responsibilities, mortgage-backed securities, credit derivatives, and relevant legal frameworks.

Stakeholder Capitalism

Incorporates the interests of various stakeholders beyond just shareholders, including employees, suppliers, customers, and communities.

Shareholder Capitalism

Focuses on maximizing shareholder value as the primary goal of a corporation, following the belief that businesses should prioritize profit generation.

Fiduciary Duty

A legal obligation of one party to act in the best interest of another, particularly the duty of corporate boards to protect shareholder interests.

Limited Liability

A legal protection that shields shareholders from personal liability for a corporation's debts, limiting their responsibility to the amount they invested.

Credit Default Swap (CDS)

A financial derivative that allows an investor to “swap” or offset their credit risk with that of another investor.

Mortgage-Backed Securities (MBS)

Investments backed by a pool of mortgages, where investors receive payments based on the cash flows from mortgage payments.

Subprime Mortgage

A type of mortgage loan offered to individuals with poor or limited credit histories, often carrying higher interest rates due to increased risk.

Collateralized Debt Obligation (CDO)

A complex financial product backed by a pool of loans and other assets, often considered to be riskier than MBS.

Bipartisan Campaign Reform Act (BCRA)

A law aimed at regulating the campaign finance industry by prohibiting certain types of political advertising and limits on corporate spending.

Citizens United v. Federal Election Commission

A landmark Supreme Court case that ruled that corporate funding of independent political broadcasts cannot be limited under the First Amendment.