Chapter 15: Business and Industry Flashcards
This federal legislation provides deterrents to investor relations misbehavior by publicly held corporations:
The Sarbanes-Oxley Act of 2002. This act is also known as the Labor Management Relations Act of 1947 and addresses unfair labor practices. It covers corporate auditing accountability and transparency. It’s related to PR because it deals with how information is disclosed, audit, transparency.
Why is corporate social responsibility so important?
It helps shape a corporation’s reputation. Only ratings of a company’s products and services rank higher in terms of reputational impact. (Boston College study)
What is business literacy?
It is the ability to use financial and business information as the basis for decisions that help an organization achieve success.
What is the Regulation Fair Disclosure?
Requires publicly traded companies release financial information to all their investors - big or small - at the same time.
Various SEC Filings
- 10-K
- 10-Q
- 8-K
- Proxy
- Filed with 60 days of close of fiscal year; include history, org structure, holdings, SWOT, financial analysis
- Filed within 35 days of close of quarter, unaudited financial data
- Filed for unscheduled material or events of importance to shareholders, such as litigation, executive malfeasance, or other problems; okay to include press release here to avoid violating Regulation Fair Disclosure law
- produced ahead of Annual Meeting of Shareholders
What is a horizontal business structure?
Decentralized decision making.
What is a vertical business structure?
Centralized decision making.
What does horizontal integration mean?
When a company buys a complementary business. Ex. BMW buys Mini Cooper
What does vertical integration mean?
When a company buys upstream or downstream suppliers - connecting all the dots. Ex. computer company buys silicon manufacturer.
What is a gag period?
The embargo of publicity materials during a specific timeframe, because these materials could be construed as an effort to sell a new security. Period between the time a company files a registration statement with the SEC for a public offering of securities and the time when the company can actual offer the securities for sale.
What is a blackout period?
It’s different from a gag period in that it usually deals with employee benefits and political campaigns (e.g., when employees can’t modify retirement or investment plan)
What is a balance sheet?
Shows a firm’s assets, liabilities and equity at a given point. (compare it to a photograph)
What is an income statement?
Measures a firm’s profitability over a period of time. It shows gross income, revenues, expenses and net income - both in cash and non-cash items. (compare it to a video)
What is a statement of cash flow?
Shows how cash flows in and out of a company over a given period of time. Shows positive or negative flow in operating, investing and financing activity (compare it to a video).
