Changing priorities in corporate cash management

Article Abstract:

Cash managers maximize corporate bank balances through disbursement float, use of computerized reporting systems and speedy concentration of funds. Stricter limits on daylight overdrafts and greater efficiency in check clearing operations following the E.F. Hutton mail and wire fraud convictions of 1985 have forced a legal-ethical reassessment of cash-management practices. A 1986 study commissioned by the Financial Executives Research Foundation shows widespread review of cash management practices. Lower short-term interest rates also increase the importance of up-to-date cash management techniques. Daylight overdrafts of $100 billion occur daily in the banking system, and potential problems require careful risk management by senders and receivers.

Commercial Banks, Security brokers and dealers, Methods, Banking industry, Cases, Services, Surveys, Ethical aspects, Cash management, E.F. Hutton & Company Inc., Check float, Financial Executives Research Foundation, EFH

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The economics of ethics: a new perspective on agency theory

Article Abstract:

Agency theory is instructive concerning the systemic results of unabashed opportunistic behavior. A lack of mutual trust can prevent otherwise mutually beneficial interactions from taking place. When such exchanges do occur, they may still be dead-weight losses because of monitoring expenses and inefficient risk-sharing. Opportunistic behavior is by its very nature not readily observed. An ethical code or agreement to refrain from opportunistic behavior cannot be enforced effectively through external sanctions or rewards. Sanctions for unethical actions must be internalized.

Analysis, Usage, Business ethics, Self-interest, Self interest

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