02_classnotes - Objectives for today Discussion O i Di i...

Info icon This preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Objectives for today Di i O i Discussion - Options Agency theory the players the conflict and resulting "agency bl " problems" easing agency problems potential solutions analyze benefits & costs ("agency costs") of solutions further examine benefits & costs of incentive contracts as a solution link between agency problems agency costs ACCY 302 (Shin) Fall 2009, Class 02 1 link between agency problems, agency costs, & accounting
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Discussion Options: The good the bad and the ugly? The good, the bad, and the ugly? ACCY 302 (Shin) Fall 2009, Class 02 2
Image of page 2
Option Backdating ??? ACCY 302 (Shin) Fall 2009, Class 02 3
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
WSJ: Jan 12, 2007 Regulators are looking into a falsely dated grant of 7.5 million options to Steve Jobs. Documents says Apple's board approved option grants with an exercise price of $18.30 on Oct. 19 2001 19, 2001 . Truth is that the final terms of the grant were set on December 18 2001 Apple shares were December 18, 2001 . Apple shares were trading at $21.01 on that date . In fact, such a special board meeting on Oct. 19 did NOT occur. Apple took a $20 million charge for the grant, reflecting the difference between the grant price and the actual stock price on December 18 ACCY 302 (Shin) Fall 2009, Class 02 4 and the actual stock price on December 18.
Image of page 4
Agency theory The players: Organizational decisions are: delegated to "agents" (i.e., managers) by the "principals" (usually h h ld l d ) h t shareholders or lenders), who want the agents to act on their behalf which creates a " " ACCY 302 (Shin) Fall 2009, Class 02 5
Image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon