33:620:301 Lecture Notes - Lecture 5: Activist Shareholder, Developed Market, Financial Statement
Document Summary
Regulating the behavior of the firm"s managers and employees. Having a strong strategy isn"t enough, managers and employees must do the right things for firm to achieve objectives. Firms rely on processes to regulate behavior. Deals with relationship among shareholders, management, and board of directors in defining direction and performance of corporation. Shareholders are owners of corporation, they invest their money in company and receive shares of common stock in exchange. Hope to earn return on investment and return is dependent on success of corporation. Interest in qualified ceo and senior managers; monitoring behavior and performance of management team and ability to operate company and achieve objectives; ability to influence strategic decisions. Most developed market economies have separation between shareholders of corporation and managers. Managers have different interests than shareholders and shareholders can"t easily monitor managers. Corporate governance helps align interests of shareholders and managers.