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There are many forces which will tend to create a convergence between the interests of stockholders and managers, and thus cause managers to be interested in maximizing a corporation's profits or value: a. Competitive pressures could lead to stock price declines for nonperforming company, and again result in take overs, proxy contest, etc. b. In many corporations, management remunerations are tied to the performance and managers frequently are awarded stock options which gain value as the price of shares rises. Thus, managers will have an interest in maximizing stockholder welfare. c. Corporate shares are not only owned by widely dispersed stockholders but by large institutional holders such as: banks, insurance companies, mutual funds, pension funds, etc. These organizations employ analysts who continually study stock performance. Nonperforming companies would be sold from these institutions' portfolios, and lead to decreased prices of these stocks. This could lead to the dismissal of present management.
Preferred stockholders have a greater claim on the assets and profits of a company compared to common stockholders. If a company is liquidated, preferred stockholders have to be paid first before the common stockholders.
Bondholders own a share of the debt of a company. Stockholders own a share of the equity of a company.
agency
Strategic decisions are made by executive level managers. Operational decisions are made by line managers. Operational decisions can change from day-to-day.
There are many forces which will tend to create a convergence between the interests of stockholders and managers, and thus cause managers to be interested in maximizing a corporation's profits or value: a. Competitive pressures could lead to stock price declines for nonperforming company, and again result in take overs, proxy contest, etc. b. In many corporations, management remunerations are tied to the performance and managers frequently are awarded stock options which gain value as the price of shares rises. Thus, managers will have an interest in maximizing stockholder welfare. c. Corporate shares are not only owned by widely dispersed stockholders but by large institutional holders such as: banks, insurance companies, mutual funds, pension funds, etc. These organizations employ analysts who continually study stock performance. Nonperforming companies would be sold from these institutions' portfolios, and lead to decreased prices of these stocks. This could lead to the dismissal of present management.
There are many forces which will tend to create a convergence between the interests of stockholders and managers, and thus cause managers to be interested in maximizing a corporation's profits or value: a. Competitive pressures could lead to stock price declines for nonperforming company, and again result in take overs, proxy contest, etc. b. In many corporations, management remunerations are tied to the performance and managers frequently are awarded stock options which gain value as the price of shares rises. Thus, managers will have an interest in maximizing stockholder welfare. c. Corporate shares are not only owned by widely dispersed stockholders but by large institutional holders such as: banks, insurance companies, mutual funds, pension funds, etc. These organizations employ analysts who continually study stock performance. Nonperforming companies would be sold from these institutions' portfolios, and lead to decreased prices of these stocks. This could lead to the dismissal of present management.
information that flows between a firm and stockholders
Preferred stockholders have a greater claim on the assets and profits of a company compared to common stockholders. If a company is liquidated, preferred stockholders have to be paid first before the common stockholders.
Agency theory focuses on the conflicts of interest that arise between principals (owners) and agents (managers) in an organization, highlighting the need for mechanisms to align their interests. Stewardship theory, on the other hand, emphasizes the alignment of interests between managers and shareholders, suggesting that managers act as stewards who will make decisions in the best interest of the organization.
Convergence- When things come together Divergence- When things move apart
The relationship between project managers and line managers is that the project managers divide the work among the line managers and the line managers report to the project managers.
Top Performing managers has more responsibilities than an average managers.
An example of a continental-continental plate convergence is the collision boundary between the Indian Plate and the Eurasian Plate that formed the Himalayas. The convergence between these two plates has led to the uplift of the Himalayan mountain range over millions of years due to the ongoing collision between the two continental plates.
they have two or more people such as stockholders.
The agency problem is a conflict of interest inherent in any relationship where one party is expected to act in another's best interests. In corporate finance, the agency problem usually refers to a conflict of interest between a company's management and the company's stockholders.
Cultural convergence refers to a movement towards a global cultural unity. It aims to lessen the tensions between groups from different cultural backgrounds.