SIB675-ass-1 - International Finance SIB675 Assignment No.1-Due Wednesday June.1.2016 1 Centralization and Agency a It refers to a conflict of interest

SIB675-ass-1 - International Finance SIB675 Assignment...

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International Finance: SIB675Assignment No.1-Due- Wednesday, June.1.20161.Centralization and Agencya.It refers to a conflict of interest between a company's management andthe company's stockholders. The manager, acting as the agentfor the shareholders, or principals, is supposed to make decisions that will maximize shareholder wealth. Financial managers sometimes want to achieve their personal goal, such as:get a better car, or bigger office, etc. b.Centralized: c.The centralized organization is the easiest to manage, but it is sometimes difficult for the business units to feel enough ownership. The top management makes all decisions for lower levels, lower levels have no power to make any change until get approval from top management. d.Decentralized: is a systematic delegation of authority at all levels of management and in all of the organization. In a decentralization concern, authority in retained by the top management for taking major But they have forgotten the purpose of the manager who has to createincentive or compensation to guide the stockholders and together to achieve the goals.
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