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Chap 1_Introduction - Introduction Click to edit Master...

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M G M T 50 5, Fa ll 20 Click to edit Master subtitle style Introduction
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M G M T 50 5, Fa ll 20 9/30/11 Types of Organizations Sole Proprietorship Partnerships General Partnerships Limited Partnerships In this course, we will focus on Corporations Why? Dominant form of organization Well developed theory and evidence. Most principles can be applied to private firms.
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M G M T 50 5, Fa ll 20 9/30/11 Characteristics of a Corporation Owners are often not managers. Owners are often diversified. So, firm specific risk is not important. Limited liability of owners. Ease of transfer of ownership. Market price is observable.
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M G M T 50 5, Fa ll 20 9/30/11 Managers’ Mantra: “Maximize Shareholder Wealth” Clear, Measurable Objective. Reflects effect of Managers Actions on Firm’s Future. But, What if markets are “irrational”? Why not consider all stakeholders, including employees?
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