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Unformatted text preview: 23.4% Wallenberg Family Shares 27.1% Shares 24.3% Votes 41.2% Votes 35.7% Votes 32.8% Investor Incentive ABB Shares 5.7% Votes 7.4% Differences between voting rights and cash-flow rights •Pyramids of shareholding (rare in US, common in HK) •Dual-class shares (occasionally in US, only 1 case in HK) Agency Problems • Agency relationship – Principal hires an agent to represent his/her interest – Stockholders and managers • It’s impossible that all the stockholders can actively monitor the managers – The board of directors is supposed to represent the stockholders’ interests. • Agency problem: conflict of interest between principal and agent – Do US and HK corporations have similar agency problems? 7 8/29/2013 CUHK Prof Fong FINA3070 Agency Problems • US: usually between the professional managers and stockholders – E.g., see dividend policy • HK: usually between the major stockholder (who is also the manager; a principal as well as the agent for and other stockholders • Agency problem can be more severe in HK than in US • Agency problem also exists between creditors (principal) and stockholders (agent): see capital other stockholders) structure Agency Problems & Corporate Governance • Legal and Regulatory Requirements – SFC in HK (SEC in US) and the stock exchange s...
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This document was uploaded on 02/02/2014.

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