Governance_Outline - Mechanisms that mitigate agency...

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Corporate Governance Agency problem: Conflict of interest between shareholders and managers arising from the separation of ownership and control. This is a feature of publicly owned corporations where share ownership is dispersed among a large number of shareholders who do not directly manage the company. Manifestations of agency problems: Excess managerial compensation, excess managerial perks, empire building, pet projects (free cash flow problem), slacking, misuse of corporate resources etc.
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Unformatted text preview: Mechanisms that mitigate agency problems: Investor protection laws Legally mandated information disclosure Board of Directors Blockholders Performance-based compensation such as bonus, options, stocks etc. Mergers and Acquisition Competition in the product and labor markets Usage of Debt Cross-listing in a country with stronger investor protection and better information disclosure requirements...
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This note was uploaded on 03/16/2010 for the course FINANCE 30 taught by Professor Johnputhenpurackal during the Spring '10 term at University of Nevada, Las Vegas.

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