Chapter 10 - KnowledgeObjectives How is corporate...

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1 Knowledge Objectives How is corporate governance used to monitor and control managers’ strategic decisions? Why has ownership been largely separated from managerial control in the modern corporation? What is managerial opportunism, and what does it imply for strategic management? Explain three internal governance mechanisms (ownership concentration, the board of directors, and executive compensation) used to monitor and control managerial decisions.
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2 What is corporate governance? Corporate governance is used to: determine and control strategic direction and performance facilitate more effective strategic decisions align the interests of top managers with owners
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3 An Agency Relationship Figure 10.1 Figure 10.1 Hire and create
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What if………the goals of the  principal and agent conflict? Agency problem occurs: when goals conflict or agent acts opportunistically raises costs for the principal to verify appropriate agent behavior
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This note was uploaded on 11/03/2009 for the course MGMT 411 taught by Professor Clarke during the Spring '09 term at Purdue University-West Lafayette.

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Chapter 10 - KnowledgeObjectives How is corporate...

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