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Unformatted text preview: hase Manhattan This Minimizes the agency problem Copyright 2013
Copyright 2013 Board of Directors & Diverse Ownership: Con’t Consider: Is the diverse shareholder (and resulting agency cost) primarily a U.S. problem?
– Only owner/operator may minimize? Banks Is the U.S. solving this problem with ‘concentration of shareholder power’? or the concentration of free riders? Trustees
Pension Funds Copyright 2013
Copyright 2013 Con’t: Is the threat of takeover (the ultimate manifestation of ‘concentrator’ of power) the only mechanism that corporate governance has that is effective?
– Equity Holders Is forcing bankruptcy another effective tool of corporate governance?
– Debt Holders Copyright 2013
Copyright 2013 Con’t: Does the concentration of ownership resolve the agency problem?
– What about minority shareholders?
– Does equity concentration encourage excessive risk?
– Get rewards Spread failure to creditors – Does debt concentration restrict risk?
– Does concentration have an impact on shareholders? What is it?
Copyright 2013 Issue: U.S. trend to lowering restrictions on bank/corporate ownership Moving away from G5
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- Winter '14