MBA 737 Hinson Assignment 1-2

MBA 737 Hinson Assignment 1-2 - MBA 737 Agency and...

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MBA 737 Agency and Corporate Control Assignment 1-2 Jamie Hinson September 28, 2010 Question # 8 In corporations, the shareholders, who are the owners of the business, delegate the right of making decisions to a section of people called the managers who are generally qualified and have the professional competencies to manage the business of the corporation. The managers of the corporation are expected to act in the best interest of the corporation and run the corporation on behalf of the shareholders. It is easy for the managers to make the books paint an ugly picture. This will make things look dull for a company and the market may take notice of the facts reported in the financial statements. This may lead to a lower stock price for the company. A lower stock price can make a company an easy target to take over. When a company is bought out, or privately purchased via an acquisition, at a lower price, the person who designed the strategy gains from the dramatically reduced share price. Thus, in this case, if the management is fighting the bid, he is acting in the best interest of
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This note was uploaded on 10/24/2010 for the course MBA 713 taught by Professor Whitmer during the Spring '10 term at Otterbein University .

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MBA 737 Hinson Assignment 1-2 - MBA 737 Agency and...

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