MIS 4500 Lecture Notes - Proxy Fight, Cadbury Report, Insider Trading

• School: University of Manitoba
• Department: Management Info. Systems
• Course: MIS 4500
• Professor: Pourang Irani

Document Summary

Corporate governance: ways in which suppliers of finance to corps assure themselves of getting return on investment : consider stakeholders. Getting out on time : say selling options before problems surface; golden parachutes: accounting manipulations: off-balance-sheet deals; hide poor performance; prevent violation of bank covenants; continued financing. Comp package: salary, bonus and stock-based incentives. Exec comp controversy implicit incentives: keep job; avoid proxy fight; avoid bankruptcy or reorg: monitoring: by boards, auditors, large shareholders, large creditors, investment banks, rating agencies. Active monitoring: interfering to increase investors" claims; exercise of control rights. Speculative monitoring: adjust position in firm: invest further, hold, sell (the analyst: product market competition: beneficial effects; may also create gambling behavior. Reforming the board: teammates or referees: knowledge versus independence: those closest to firm have knowledge but susceptible to conflicts of interest, link from performance to board comp: Active monitoring requires control: formal control: majority of voting shares etc, real control: sufficient ownership to build coalition.