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Why the threat of a takeover might make managers work toward the goals of stockholders?
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How do you create a convergence between the interests of stockholders and managers?
To create convergence between the interests of stockholders and managers, companies can implement performance-based compensation packages that align managers' rewards with the company's long-term performance and stock price. Regular communication and transparency about company goals and strategies can also help ensure that both parties are aligned. Additionally, involving managers in strategic decision-making fosters a sense of ownership, encouraging them to prioritize stockholder interests. Finally, establishing a strong corporate governance framework can help monitor and guide managerial actions in line with shareholder objectives.
When do preferred stockholders receive dividends in relation to common stockholders?
Preferred stockholders typically receive dividends before common stockholders.
Preferred stockholders take less risk than common stockholders?
Preferred stockholders take more risk than common 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.
Why the threat of a takeover might make managers work toward the goals of stockholders?
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What are some actions that stockholders can take to ensure that management's and stockholders' interestes are aligned?
Threat of takeover.Managerial compensation: Managerial compensation is constructed not only to retain competent managers, but to align managers' interests with those of stockholders as much as possible.Direct intervention by stock holders: Today, the majority of a company's stock is owned by large institutional investors, such as mutual funds and pensions. These large institutional stockholders have the ability to exert influence on managers and as a result the firms operations.Treat of Firing: If stockholders are unhappy with current management, they can encourage the existing board of directors to change the existing management, or stockholders may even re-elect a new board of directors that will accomplish the task.Threat of takeover: If a stock price deteriorates because of management's inability to run the company effectively, competitors or stockholders may take a controlling interest in the company and bring in their own managers.
What are some actions that stockholders can can take to ensure that management's and stockholders' interest are aligned?
Threat of takeover.Managerial compensation: Managerial compensation is constructed not only to retain competent managers, but to align managers' interests with those of stockholders as much as possible.Direct intervention by stock holders: Today, the majority of a company's stock is owned by large institutional investors, such as mutual funds and pensions. These large institutional stockholders have the ability to exert influence on managers and as a result the firms operations.Treat of Firing: If stockholders are unhappy with current management, they can encourage the existing board of directors to change the existing management, or stockholders may even re-elect a new board of directors that will accomplish the task.Threat of takeover: If a stock price deteriorates because of management's inability to run the company effectively, competitors or stockholders may take a controlling interest in the company and bring in their own managers.
How do you create a convergence between the interests of stockholders and managers?
To create convergence between the interests of stockholders and managers, companies can implement performance-based compensation packages that align managers' rewards with the company's long-term performance and stock price. Regular communication and transparency about company goals and strategies can also help ensure that both parties are aligned. Additionally, involving managers in strategic decision-making fosters a sense of ownership, encouraging them to prioritize stockholder interests. Finally, establishing a strong corporate governance framework can help monitor and guide managerial actions in line with shareholder objectives.
How should managers monitor the progress of decision implementation?
Managers should monitor the progress of decision implementation by watching productivity. If productivity increases, then they have likely made the right decisions.
Who do stockholders elect to act on their behalf?
The stockholders elect a board of directors to act on their behalf.The board hires managers to run the corporation on a daily basis. The stockholders become partial owners of the corporation.The corporation uses the money received from selling the stock to set up and run the business.
What are some mechanisn that encourage manager to act in the best interests of stockholder?
Four primary mechanisms are used to motivate managers to act in stockholders' best interests:Managerial compensationDirect intervention by stockholdersThreat of firingThreat of takeovers1.Managerial CompensationManagerial compensation should be constructed not only to retain competent managers, but to align managers' interests with those of stockholders as much as possible.This is typically done with an annual salary plus performance bonuses and company shares.Company shares are typically distributed to managers either as: Performance shares, where managers will receive a certain number shares based on the company's performance.Executive stock options, which allow the manager to purchase shares at a future date and price. With the use of stock options, managers are aligned closer to the interest of the stockholders as they themselves will be stockholders.2.Direct Intervention by StockholdersToday, the majority of a company's stock is owned by large institutional investors, such as mutual funds and pensions. As such, these large institutional stockholders have the ability to exert influence on mangers and, as a result, the firm's operations.3.Threat of FiringIf stockholders are unhappy with current management, they can encourage the existing board of directors to change the existing management, or stockholders may even re-elect a new board of directors that will accomplish the task.4.Threat of TakeoversIf a stock price deteriorates because of management's inability to run the company effectively, competitors or stockholders may take a controlling interest in the company and bring in their own managers.
What is the purpose of identifying and explaining the main tasks required of managers?
to monitor the work flow.
What is ment by accounting?
Accounting is the keeping of financial accounts. Those who work in accounting are responsible for keeping accurate financial records, and providing reports to business owners, managers, and stockholders.
When do preferred stockholders receive dividends in relation to common stockholders?
Preferred stockholders typically receive dividends before common stockholders.
Preferred stockholders take less risk than common stockholders?
Preferred stockholders take more risk than common stockholders.
What does accounting do?
Accounts is the language of business. It records and processes the business transactions and generates useful information for the managers and stockholders. Reference: http://www.gripaccounting.com/financial-accounting/introduction/
