6 Pages Posted: 3 Apr 2012
Date Written: April 1, 2012
This paper provides a brief summary of a little-understood approach to corporate finance that the chief executive officer a major credit-worthy company could undertake to enable his/her company to operate in a more ethical way while enhancing corporate profitability. It covers only the highlights.
The implementation of the modified system of corporate finance would require no taxes, redistribution, or government command. With the modified system of corporate finance, companies would be free to continue to meet their capital requirements as before, but they would have an additional, more ethical and profitable, market means to satisfy their capital requirements. If widely understood by market participants, this additional means could be voluntarily employed to:
1. enhance the earning capacity of the participating companies, their employees and their customers,
2. promote more sustainable, environmentally friendly, and more broadly shared growth and prosperity,
3. reduce poverty, welfare dependence and the need for government expenditures, taxes, and other transfer payments,
4. enhance the value of equity investments and reduce the risk of borrowing, and
5. enhance the credit worthiness of national governments and their ability to raise revenue.
A fuller explication of the analysis underlying this approach is provided in other writings cited in this article.
JEL Classification: E19, E29, G30, I30, K19, L21, M14, M21, O40
Suggested Citation: Suggested Citation