20200602_business valuation. boloroo.docx - 1 Please describe entrenched target management When managers hold little equity and shareholders are too

20200602_business valuation. boloroo.docx - 1 Please...

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1. Please describe entrenched target management When managers hold little equity and shareholders are too dispersed to take action against non-value maximization behavior, insiders may deploy corporate actions to obtain personal benefits, such as shirking and perquisite consumption. When ownership and control is divided within a company, agency costs arise. However, agency costs decline if the ownership within the company increases as managers are responsible for a larger share of these costs. On the other hand, giving ownership to a manager within a company may translate into greater voting power which makes the manager's workplace more secure. Hence, they gain protection against takeover threats and the current managerial market. 2. What is an event of overbid in the M&A process (Mergers; Acquisitions; Misvaluation; Hypothetical Counterfactual)
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