Intermediate Financial Management (MindTap Course List)
12th Edition
ISBN: 9781285850030
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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Chapter 10, Problem 4Q
Summary Introduction
To discuss: Some actions taken by an entrenched management might harm the shareholders.
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Why might one expect managers to act in shareholders' interests? Give some reasons.
How could overconfidence affect the financial manager of the firm and the firm’s shareholders?
What are the conflicts between shareholders and managers?
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Intermediate Financial Management (MindTap Course List)
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- Which of the following does not help align managerial and shareholder incentives? Question options: a) Market for Corporate Control b) Product Market Competition c) Antitrust Law d) Corporate Law e) Markets for Directorsarrow_forwardwhy is it essential for a corporate manager to balance the interests of society and shareholders?arrow_forwardWhat is the possible agency conflict between inside owner/managers and outside shareholders? What are some possible agency conflicts between borrowers and lenders? How is it possible for an employee stock option to be valuable even if the firm’s stock price fails to meet shareholders’ expectations?arrow_forward
- Managers of corporations don’t always takeactions that are in the best interest of the corporation’s owners. What are some of those actions, andhow can corporations structure the managementcontract to help control them?arrow_forwardA 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?arrow_forwardAre poison-pill defenses ethical? If a potential acquirer buys company stock legally, thereby becoming a part owner of the company, should management be allowed to entrench itself against the wishes of this owner? Explain your answer.arrow_forward
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