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- What are some actions stockholders can take to ensure that management’s interests and the interests of stockholders coincide? What are some other factors that influence management’s actions?What are some actions stockholders can take to ensure that management’s interests and the interests of stockholders coincide?What is the common agency problem faced by shareholders? Describe TWO (2)situations in which stockholders can ensure that management’s and stockholders’interests are aligned?
- What conflicts of interest can arise between managers and stockholders?What actions that shareholders can take to ensure that management's andshareholders' interests are aligned? Discuss.What actions that shareholders can take to ensure that management’s and shareholders’ interests are aligned? Explain.
- What do you think is the main issue of conflict between the stockholders and managers?A well-run company should align the management’s interest and with the owner’s interests. What are some actions that stockholders can take to ensure that management’s and stockholders’ interests are aligned? Is this important? What are some of the risks/consequences if the management’s interests are not aligned with the owners?Explain how a firm might use stock options in order to incentivise a manager to work in the shareholders’ best interests.
- What are governance mcechanisms that help align the incentives of stockhlers and managers - help monitor and control manegement.How does the use of financial leverage affect stockholders’ control position?Describe some mechanisms that are used to solve the stockholder/bondholder agency conflict and the stockholder/manager conflict. How effective are each of these methods in accomplishing their goal? Why?