ECONOMICS PACKAGE (APSU)>CUSTOM<
ECONOMICS PACKAGE (APSU)>CUSTOM<
17th Edition
ISBN: 9781323403891
Author: Hubbard
Publisher: PEARSON C
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Chapter 8, Problem 8.4.4PA
To determine

The term of board members and corporate governance.

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An article in The Wall Street Journal discusses a trend among some large U.S. corporations to base the compensation of outside members of their boards of directors partly on the performance of the corporation. "This growing practice more closely aligns the director to the company. [Some] companies link certain stock or stock-option grants for directors to improved financial performance, using a measure such as annual return on equity." (a)  How would such a linkage tend to reduce the agency problem between managers and shareholders as a whole? (b)  Why could directors be more efficient than shareholders at improving managerial performance and changing their incentives? (c)  How does the concept of moral hazard apply to this situation and what policies can be put in place to mitigate it?
From sources other than lecture note or websites such as Wikipedia, and Investopedia, find a definition of corporate governance, and explain in your own words what you think that definition means, and how it can be applied in a practical sense to the governance of a company. Note in your answer whether there would be any difference in applying the definition to different sized companies. Reference your quote please.
Briefly explain the “Sarbanes Oxley Act of 2002” and its impact on the Financial Sector and consumer. (250 words)
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