Question

I need answers for the following questions from Book

Fundamentals of

Financial Management

James C. Van Horne

John M. Wachowicz, Jr.

9 - As an investor, do you think that some managers are paid too much? Do their rewards come at your expense?

11. What is corporate governance? What role does a corporation’s board of directors play in corporate governance?

12. Compare and contrast the roles that a firm’s treasurer and controller have in the operation of the firm.

Answer 1

9) managers work in a competitive sceneric. A company must pay them atleast what they could earn elsewhere. This is interest of shareholders. In case of managers are paid in excess of their economic contribution, the returns available to investors would be less.

However , shareholders would sell their stock and invest elsewhere. Hence there is a balancing factors working in the direction of equilibrating managers pay across business firms for a given level of economic contribution.

11) corporate governance refers to system by which corporations are managed and controlled. It encompasses the relationships among a company’s shareholders, board of directors and senior management. These relationships provide the framework with in which corporate objective are set and performance is monitored.

The board of directors sets company wide policy and advise the CEO and other senior executives who manage the company day to day activities , board review and approve strategy significant investments and acquisition. The board also overseas operating plans , capital budgets and company’s financial reports to common shareholders.

12). The controller responsibility are essentially accounting in nature , cost accounting as well as budgets and forecasts are far internal use , external financial reporting is provided to shareholders , SEBI OR SEC

The treasurers responsibilities include investment ( capital budgeting , pension management ) financing (commercial banking and investment banking relationships, investors relations , dividends disbursement) and asset management ( cash management , credit management )