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AEM_321_octet-stream_Notes

AEM_321_octet-stream_Notes - Lecture Date 1 Youd rather get...

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Lecture Date: February 13, 2008 1. You’d rather get a dividend than a split, at least in the short term. XIV. You can issue stock rights or stock options if authorized by the Articles of Incorporation a. You have to consider whether this would change the proportionality of ownership rights. NEWWWWWWWWWWWWWWWWWWWWWWWWW 2. In the wake of Enron and World.com nearly every regulatory body has enacted new rules regarding corporate accountability like the Sarbanes-Oxley Act. a. There are many overlapping rules b. Compliance with these rules imposes a real cost on companies. c. Corporate law generally focuses on solving a fundamental problem: moral hazard. i. The shareholders who invest in the company are not the same people qho actually run the company. ii. The board of Directors represents the owners and oversees the activities of individual employees. iii. What happens when the board doesn’t do their job? d. The S.O. Act requires every board to have an audit committee composed entirely of outside directors, at lease one of which has financial expertise.
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