Assignment: 1) Read the New Yorker article, "The Greed Cycle," by John Cassidy and submit completed study questions. 2) Begin individual research on team topic and bring notes and references to class to share with team members.THE GREED CYCLE
1. What is the name of the economic theory that justified the CEO stock-option practices described in the article?
2. Describe that theory.
3. Under that theory, how does the principle of ‘shareholder return' relate to other stakeholder interests? What stakeholders are most likely to benefit? Which ones may be harmed?
4. In practice, what kind of ‘shareholder return' was emphasized by the incentive that stock options gave CEO's?
5. List at least 4 legal tactics described in the article that firms use to manipulate the price of stock and therefore the value of stock options. List at least 2 used in the same way that are illegal.
6. How did CEO stock-options contribute to the recent corporate corruption? What are some possible corrections