MGEC40H3 Study Guide - Final Guide: Executive Compensation, Making Money, Nash Equilibrium
16 Apr 2013
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Ecmc40 - exam review: separation of ownership and control, by fama and jensen. Organization as nexus (connection/combination) of contracts, how to define the boundaries of the organization. registering a company is a form of contract, employees- contract etc. most are written, some verbal. Residual claims the right of a shareholder or another party to the profit of a company after all prior obligations have been paid, who"s going to benefit. Residual claimants the shareholders or another other person with the with right to the profit. Decision management initiation and implementation, from small decision to big who"s going to manage. Residual risk bearing - organizations in order to function need to take risk, and as entrepreneurial firm, the owner bares all the risk, but in bigger companies the question is who"s going to take that risk, Separation of residual risk bearing from decision management leads to decision systems that separate decision management from decision control.
