Among the many interesting topics related to businesses covered in this module, two of them probably...

Among the many interesting topics related to businesses covered in this module, two of them probably need our further attention and discussion. One is about the goal of a firm, which is the maximization of the owners’ wealth. The other is about corporate governance issues resulted from the separation of ownership and management, which is another principle of finance. Choose one of them and discuss.

Expert Solution

Separation of Ownership and management : Corporate Governance Issue

In public listed companies. The ownership doesn't lie with the management of the company. As the shares are distributed in public, so the ownership is also distributed. Now shareholders appoint a Board who decides the management of the company. This has led to Agent- Principal problem. Agent being the management here and principal is the shareholders. Management's compensation depends on the size of the company and also the share performance. So to increase the size of the company, management tend to go for mergers which are not strategically important for the company. At times managers try to opt projects that will reflect immediate profit, this helps to increase the share price in the short run. Managers stop thinking about the long term benefit of the shareholders.

So these all are corporate governance issues. Proper governance means where management will work for the benefit of the shareholders, there will be no information asymmetry between management and shareholders. Proper corporate governance plays an important part in public company.

jeff jeffy answered 1 year ago

Find an article related to the topics covered about immune system and infectious diseases. write a...

Find an article related to the topics covered about immune system and infectious diseases. write a short paragraph and story

As we covered in this module, there are two types of corrections: community-based and institutional corrections....

As we covered in this module, there are two types of corrections: community-based and institutional corrections. Select either community-based sanctions (probation, parole, post-release supervision, etc.) or institutional corrections (i.e., jails, prisons). Identify a policy or practice issue pertaining to your choice and evaluate the ethical challenges of that policy. Ensure that you use the ethical frameworks we identified in Week 1. Is there a conflict between ethics, public safety, and organizational need?

I am about to start my graduation thesis, I need some interesting topics related to business...

I am about to start my graduation thesis, I need some interesting topics related to business Administration. Preferably something with Marketing, human resource management or international management. And how will be my method of research to accomplish?

Businesses have several costs and one among them is development cost. They are material cost for...

Businesses have several costs and one among them is development cost. They are material cost for companies which are either expensed or capitalised as an asset. Required: Discuss the conceptual issues involved and the definition of an asset that may be applied in determining whether development expenditure should be treated as an expense or an asset.

Question 1 Businesses have several costs and one among them is development cost. They are material...

Question 1 Businesses have several costs and one among them is development cost. They are material cost for companies which are either expensed or capitalised as an asset. Required: Discuss the conceptual issues involved and the definition of an asset that may be applied in determining whether development expenditure should be treated as an expense or an asset. Use examples to support your answer Question 2 Your advice has been requested by the accountant of Magic plc on the issues...

There are many differences among small businesses. Discuss some of the differences we might expect to...

There are many differences among small businesses. Discuss some of the differences we might expect to see among VSEs, SEs and MSEs.

Organisations are faced with many risks, which include many types of economic risks, among them interest...

Organisations are faced with many risks, which include many types of economic risks, among them interest rate risks. Based on the above background Describe and discuss the different types of interest risk Describe the characteristics and benefits of interest rate swaps compared with other forms of interest rate risk management, such as forward rate agreements and interest rate futures

Many businesses offer free samples of their products or services to potential customers to induce them...

Many businesses offer free samples of their products or services to potential customers to induce them to become customers. Write two or three paragraphs in which you describe how this strategy can be implemented online. Be sure to note how the amount of sampling that is likely to be beneficial differs in the online environment and the physical world.

Choose two random topics from Bloomberg business website and summarize them with source?

Price Discrimination is an interesting concept. Discuss ONE of these two questions: Many restaurants have a...

Price Discrimination is an interesting concept. Discuss ONE of these two questions: Many restaurants have a mid-to-late afternoon “Early Bird Special” where they offer prices that are lower than at other times of the day. Why do they do this? What must happen for this practice to be profitable? OR Many businesses lure customers with coupons. Finding, clipping and keeping coupons can be a hassle. Yet businesses continue to produce coupons and consumers continue to use coupons. Do coupons really...

Question