Ch10 Lec SLIDES 2009 - KnowledgeObjectives q q q q How is...

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11 Knowledge Objectives q How is corporate governance used to monitor and control managers’ strategic decisions? q Why has ownership been largely separated from managerial control in the modern corporation? q What is managerial opportunism, and what does it imply for strategic management? q 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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22 What is corporate governance? n Corporate governance is used to: q determine and control strategic direction and performance q facilitate more effective strategic decisions q align the interests of top managers with owners
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33 An Agency Relationship Figure 10.1 Hire and create
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44 What if…the goals of the principal  n Agency problem occurs: q when goals conflict or agent acts opportunistically q raises costs for the principal to verify appropriate agent behavior n Agency costs include: q monitoring q enforcing q designing reward systems that align the interests
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55 Manager and Shareholder Risk and  Diversification Figure 10.2
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This note was uploaded on 12/04/2009 for the course MGMT 451 taught by Professor Staff during the Spring '08 term at Purdue University-West Lafayette.

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Ch10 Lec SLIDES 2009 - KnowledgeObjectives q q q q How is...

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