This chapter discusses legal, regulatory, and political issues affecting businesses. It provides an overview of key legislation like the Sherman Antitrust Act and agencies that enforce regulations. The chapter examines the rationale for and costs/benefits of government regulation. It also explores how businesses can participate in and influence the political process through lobbying and campaign contributions. The chapter concludes with discussions of self-regulation, compliance programs, and legislation like Sarbanes-Oxley that aim to increase transparency and protect investors.
This chapter discusses legal, regulatory, and political issues affecting businesses. It provides an overview of key legislation like the Sherman Antitrust Act and agencies that enforce regulations. The chapter examines the rationale for and costs/benefits of government regulation. It also explores how businesses can participate in and influence the political process through lobbying and campaign contributions. The chapter concludes with discussions of self-regulation, compliance programs, and legislation like Sarbanes-Oxley that aim to increase transparency and protect investors.
This chapter discusses legal, regulatory, and political issues affecting businesses. It provides an overview of key legislation like the Sherman Antitrust Act and agencies that enforce regulations. The chapter examines the rationale for and costs/benefits of government regulation. It also explores how businesses can participate in and influence the political process through lobbying and campaign contributions. The chapter concludes with discussions of self-regulation, compliance programs, and legislation like Sarbanes-Oxley that aim to increase transparency and protect investors.
This chapter discusses legal, regulatory, and political issues affecting businesses. It provides an overview of key legislation like the Sherman Antitrust Act and agencies that enforce regulations. The chapter examines the rationale for and costs/benefits of government regulation. It also explores how businesses can participate in and influence the political process through lobbying and campaign contributions. The chapter concludes with discussions of self-regulation, compliance programs, and legislation like Sarbanes-Oxley that aim to increase transparency and protect investors.
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CHAPTER 4
Legal, Regulatory, and
Political Issues Chapter Objectives
To understand the rationale for government regulation of
business To examine the key legislation that structures the legal environment for business To analyze the role of regulatory agencies in the enforcement of public policy To compare the costs and benefits of regulation To examine how business participates in and influences public policy To describe the governments approach for legal and ethical compliance Governments Influence on Business
Laws derived from the U.S. Constitution and Bill
of Rights influence business. Laws are enforced through the judicial system. Corporations have the same legal status as a person. Major Laws Affecting Business
Sherman Antitrust Act
Clayton Antitrust Act Federal Trade Commission Act Robinson-Patman Act Lanham Act Law Enforcement Agencies
Food & Drug Administration (1906)
Federal Reserve Board (1913) Federal Trade Commission (1914) Federal Communication Commission (1934) Securities & Exchange Commission (1934) National Labor Relations Board (1935) Law Enforcement Agencies (cont)
Equal Employment Opportunity Commission (1970)
Environmental Protection Agency (1970) Occupational Safety & Health Administration (1971) Consumer Product Safety Commission (1972) Commodity Futures Trading Commission (1974) Federal Housing Finance Industry (2008) Global Regulation
Import barriers Product quality, safety, distribution, sales, and advertising regulation North American Free Trade Agreement (NAFTA) European Union (EU) Costs of Regulation
Administrative spending patterns of federal
regulatory agencies Staffing levels of federal regulatory agencies Business expenditures in compliance with regulations Benefits of Regulation
Greater equality in the workplace
Safer workplaces Resources for disadvantaged societal members Safer products More information about products Greater product variety Cleaner air and water Preservation of wildlife Deregulation
Removal of all regulatory authority
Belief that less government intervention allows business markets to work more effectively Many industries have been deregulated. Critics of deregulation cite higher prices and poorer service/quality. Self-Regulation
Companies attempt to regulate themselves to
demonstrate social responsibility and preclude additional regulation. Firms may chose to join trade organizations with self-regulatory programs. Best-known self-regulatory association is the Better Business Bureau. Benefits include lower costs and more practicality and realism in programs. The Contemporary Political Environment
Greater transparency in the congressional committee
process Limiting campaign contributions from individuals, political parties, and special interest groups (Federal Election Campaign Act) Many states have shifted their electoral process from traditional party caucus to primary elections. Special-Interest Groups
Seek to educate the public about significant social
issues and to support legislation and regulation of business conduct they deem irresponsible Corporate Approaches to Influencing Government
Lobbying Political Action Committees Campaign Contributions Federal Sentencing Guidelines for Organizations
Passed in 1991 to streamline the sentencing and punishment of
organizational crime Provides an incentive for organizations to establish due diligence ethics and compliance programs Seven Steps to Effective Compliance and Ethics Program Establish a code of ethics. Appoint a high-level compliance manager, usually an ethics officer. Take care in delegation of authority. Institute a training program and communication system. Monitor and audit for misconduct. Enforce and discipline. Revise program as needed. Sarbanes-Oxley Act
Legislation to protect investors by
improving accuracy and reliability of corporate disclosures Many benefits
