BUS 17 Lecture Notes - Lecture 17: Negative Relationship, Ceo Succession, Quid Pro Quo
Document Summary
Boards of directors are an economic institution that, in theory, helps to solve the agency problems inherent in managing an organization but the economic theory has been quite limited. Major conflict within the boardroom is between the ceo and the directors. The ceo their independence, to monitor the ceo. Ceo relative to that of the existing directors. The directors of companies, however, being the managers rather of other people s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance as owners . Negligence and profusion, therefore, must always prevail, more of less, in the management of the affairs of such a company. Control will tend to be in the hands of those who select the proxy committee and by whom, the election of directors for ensuing period will be made.
