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How do you create a convergence between the interests of stockholders and managers?
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What are some of the forces that cause managers to act in the interest of shareholder?
There are many forces which will tend to create a convergence between the interests of stockholders and managers, and thus cause managers to be interested in maximizing a corporation's profits or value: a. Competitive pressures could lead to stock price declines for nonperforming company, and again result in take overs, proxy contest, etc. b. In many corporations, management remunerations are tied to the performance and managers frequently are awarded stock options which gain value as the price of shares rises. Thus, managers will have an interest in maximizing stockholder welfare. c. Corporate shares are not only owned by widely dispersed stockholders but by large institutional holders such as: banks, insurance companies, mutual funds, pension funds, etc. These organizations employ analysts who continually study stock performance. Nonperforming companies would be sold from these institutions' portfolios, and lead to decreased prices of these stocks. This could lead to the dismissal of present management.
What is the difference between preferred and common stockholders?
Preferred stockholders have a greater claim on the assets and profits of a company compared to common stockholders. If a company is liquidated, preferred stockholders have to be paid first before the common stockholders.
What is the difference between a bondholder and a stockholder?
Bondholders own a share of the debt of a company. Stockholders own a share of the equity of a company.
The potential conflict of interest between a firms owners and its managers is referred to as what?
agency
What is the difference between strategic decision administrative decision and operational decision?
Strategic decisions are made by executive level managers. Operational decisions are made by line managers. Operational decisions can change from day-to-day.
What are the forces that causes the managers to act in the interest of the shareholders?
There are many forces which will tend to create a convergence between the interests of stockholders and managers, and thus cause managers to be interested in maximizing a corporation's profits or value: a. Competitive pressures could lead to stock price declines for nonperforming company, and again result in take overs, proxy contest, etc. b. In many corporations, management remunerations are tied to the performance and managers frequently are awarded stock options which gain value as the price of shares rises. Thus, managers will have an interest in maximizing stockholder welfare. c. Corporate shares are not only owned by widely dispersed stockholders but by large institutional holders such as: banks, insurance companies, mutual funds, pension funds, etc. These organizations employ analysts who continually study stock performance. Nonperforming companies would be sold from these institutions' portfolios, and lead to decreased prices of these stocks. This could lead to the dismissal of present management.
What are some of the forces that cause managers to act in the interest of shareholder?
There are many forces which will tend to create a convergence between the interests of stockholders and managers, and thus cause managers to be interested in maximizing a corporation's profits or value: a. Competitive pressures could lead to stock price declines for nonperforming company, and again result in take overs, proxy contest, etc. b. In many corporations, management remunerations are tied to the performance and managers frequently are awarded stock options which gain value as the price of shares rises. Thus, managers will have an interest in maximizing stockholder welfare. c. Corporate shares are not only owned by widely dispersed stockholders but by large institutional holders such as: banks, insurance companies, mutual funds, pension funds, etc. These organizations employ analysts who continually study stock performance. Nonperforming companies would be sold from these institutions' portfolios, and lead to decreased prices of these stocks. This could lead to the dismissal of present management.
How do you facilitate the stockholders and firm?
information that flows between a firm and stockholders
What is the difference between preferred and common stockholders?
Preferred stockholders have a greater claim on the assets and profits of a company compared to common stockholders. If a company is liquidated, preferred stockholders have to be paid first before the common stockholders.
What plates are involved in a subduction plate?
Convergence between oceanic plate and one continental plate. Convergence between two oceanic plates.
Difference between convergence and divergence?
Convergence- When things come together Divergence- When things move apart
What are the relationship between project managers and line managers?
The relationship between project managers and line managers is that the project managers divide the work among the line managers and the line managers report to the project managers.
What are the critical differences between average managers and top performing managers?
Top Performing managers has more responsibilities than an average managers.
What are some similarities between a corporation and a franchise?
they have two or more people such as stockholders.
Definition of cultural convergence?
Cultural convergence refers to a movement towards a global cultural unity. It aims to lessen the tensions between groups from different cultural backgrounds.
Distinguish between cultural convergence and cultural divergence?
cultural convergence is when it is all about what happens in the culture, b ut culture divergence is when the culture has different cultural parts. :)
What are the problems of agency theory?
The agency problem is a conflict of interest inherent in any relationship where one party is expected to act in another's best interests. In corporate finance, the agency problem usually refers to a conflict of interest between a company's management and the company's stockholders.
