Also failed in their respective roles respective

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Unformatted text preview: egulators, banks, and institutional investors also failed in their respective roles respective Failure to reform corporate governance will damage Failure investor confidence, stunt the development of capital markets, raise the cost of capital, distort capital allocation, and even shake confidence in the capitalist system itself system 28 Summary Corporate governance is the economic, legal and Corporate institutional framework in which control and cash flow are distributed among stakeholders are Agency problem: self-interested managers; Firms with Agency excessive free cash flows and low growth opportunities are most susceptible are Remedies for Agency problems Remedies – – – – – – Strengthening board independence Managerial incentive contracts Concentrated ownership Increasing debt, reducing free cash flows Listing on a major exchange Inviting hostile bids if an agency conflict exists 29...
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