Term
| What is Corporate Governance? |
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Definition
| relationship among stakeholders used to determine and control the strategic dircetion and performance of organziations |
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Term
| What is the primary objective of Corporate Governance? |
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Definition
| to establish order between a firm's owners and its top-level managers whose interests may be in conflict |
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Term
| Basis of the Modern Corporation |
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Definition
| shareholders purchase stock.......reduce risk by holding diversified portfolios....professional managers are contracted to provide decision making. |
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Term
| Who are the three groups that make up Corporate Governance |
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Definition
| Shareholder, Management, Board of Directors |
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Term
| Who are the agents and who are the principles? |
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Definition
| Agents are top Management....and Principles are shareholders |
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Term
| Agency Relationship Problems...what are they and explain |
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Definition
| Use of free cash flows.......managers prefer to invest funds into new products while shareholders would rather receive the funds as dividends so that they can receive a better return elsewhere. |
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Term
| What are some responses to Agency problems |
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Definition
| Stockholders rely upon internal and external goverance mechanisms to prevent managerial opportunism |
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Term
| Governance Mechnanisms...what are they? |
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Definition
| Ownership concentration, Board of Directors...Executive Compensation...and Market for Corporate Control |
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Term
| Ownership Concentration...internal or external governance mechanism? |
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Definition
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Term
| Board of Directors...internal or external governance mechanism? |
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Definition
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Term
| Executive Compensation...internal or external governance mechanism? |
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Definition
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Term
| Market for Corporate Control...internal or external governance mechanism? |
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Definition
| external... hostile takeoever is an example |
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Term
| It is important to sesrve the intersts of the firms multiple stakeholder groups...what are the groups? |
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Definition
| capital, product, and organizational stakeholders. |
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