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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.
Are corporate management decisions influenced by the desire to keep stockholder's happy?
Corporate management decisions are influenced by the desire to keep stockholders happy.
What are the key aspects of corporate organization?
The major characteristics of a corporation are separate legal existence, limited liability of stockholders, transferable ownership rights, ability to acquire capital, continuous life, corporation management, government regulations, and additional taxes.
Do the stockholders elect the board of directors.?
Yes, stockholders typically elect the board of directors in a corporation. This election usually takes place during the annual shareholders' meeting, where stockholders vote on proposed candidates for the board. The board of directors is responsible for overseeing the company's management and making key decisions on behalf of the shareholders. This process ensures that stockholders have a say in the governance of the company they invest in.
In a corporation what group has the ultimate responsibility for protecting and managing the stockholders' interests?
The board of directors of a corporation holds the responsibility for the protection and management of the investor's assets. A corporation's board of directors are voted in by the shareholders to serve as representatives on their behalf. In order to serve as an effective member, they are required to display objectivity, and always provide a strong defense of shareholders' rights.
Do preferred stockholders have preferential rights over common stockholders and creditors?
YES
What is the advantage of holding preferred stock?
However, preferred stockholders are almost always given prior rights over common stockholders in the matter of dividends.
What is the difference between preferred stock and common stock?
Preferred stock and common stock are both types of ownership in a company, but they have some key differences. Preferred stockholders have priority over common stockholders when it comes to receiving dividends and assets in the event of liquidation. Preferred stock usually pays a fixed dividend, while common stock dividends can vary. Additionally, preferred stockholders typically do not have voting rights in the company, unlike common stockholders who usually do have voting rights.
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.
How do you calculate the return on common stockholders' equity?
The return on common stockholders' equity is calculated by dividing the net income available to common stockholders by the average common stockholders' equity. This ratio shows how effectively a company is generating profits from the equity invested by common stockholders.
What was a colony in which stockholders were granted rights and privileges by the English monarch?
A colony in which stockholders were granted rights and privileges by the English.
What are some actions stockholders could take to ensure the management interest and those of stockholders coincided?
Sell all of their stocks in corporations in which the interests of management do not coincide with those of the stockholders.
Can you list the general rights of a common stockholders?
Vote at Stockholders' meetings Sell or otherwise dispose of their stock Purchase their proportional share of any common stock later issued by the corporation Receive the same dividend, if any, on each common share of the corporation Share in any assets remaining after creditors and preferred stockholders are paid when, and if, the corporation is liquidated. Each common share receives the same amount Stockholders also have the right to receive timely financial reports.
Do bondholders have voting rights?
No, only stockholders have voting rights. Bondholders do not.
Which gives stockholders a voice in how the corporation is run?
Stockholders are given a voice in how a corporation is run primarily through their voting rights, which allow them to participate in key decisions such as electing the board of directors and approving major corporate policies or changes. Additionally, stockholders can express their opinions and influence management through shareholder meetings and proposals. These mechanisms ensure that stockholders can impact the direction and governance of the company.
