Note 1_Chapter 1&2 - FinancialManagement...

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1 Financial Management Barry Marchman, Ph.D. Georgia Institute of Technology Atlanta, GA 30332 Ph: 404-894-5110 Email:  barry.marchman@mgt.gatech.edu 
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2 Issues in Financial Management
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3 Issues In Financial Management Decision Making Forms of Business Goals of Financial Management Agency Problem Financial Markets Ethics
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4 Issues In Financial Management – Decisions Personal Finance What do I do with my money? Fool School   Baby Steps Debt  Credit – why is this important?
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5 Issues In Financial Management – Decisions Corporate Finance What do I do with my money? Capital Budgeting Debt  Capital Structure Credit – why is this important? Working Capital Management
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6 Issues In Financial Management – Forms Sole Proprietor Partnership Corporation
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7 Issues In Financial Management – Goals What should be the goal of a corporation? Why?
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8 Issues in Financial Management –  The Agency Problem Principal – one who hires an agent Agent – one who acts on the behalf of another Real Estate Entertainment Sports Medical Legal Mechanic
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9 Issues in Financial Management –  The Agency Problem Agency relationship Principal hires an agent to represent his/her interests Stockholders (principals) hire managers (agents) to run the  company Agency problem Conflict of interest between principal and agent Management goals and agency costs
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10 Issues in Financial Management –  The Agency Problem Managerial compensation Incentives can be used to align management and  stockholder interests The incentives need to be structured carefully to make sure 
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This note was uploaded on 03/06/2012 for the course MGT 3062 taught by Professor Marchman during the Spring '10 term at Georgia Institute of Technology.

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Note 1_Chapter 1&2 - FinancialManagement...

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