Shareholder Interests

FM – Nov 2018 – L3 – Q7 – Corporate Governance and Financial Strategy

Analyze potential agency conflicts between company owners and managers and methods to mitigate these issues.

Question

Agency theory was developed by Jenson & Meckling (1976), defining the agency relationship as a form of contract between a company’s owners and its managers, where owners appoint agents (managers) to manage the company on their behalf. As part of this arrangement, owners delegate decision-making authority to management. In this relationship, owners expect agents to act in their best interest.

Required:

a. Agency conflicts may arise in various ways. Discuss four of these conflicts. (9 Marks)

b. State four methods by which problems arising from these conflicts could be reduced. (6 Marks)

Answer

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Tags: Agency theory, Corporate Governance, Managerial Actions, Mitigation Strategies, Principal-Agent Conflict, Shareholder Interests
Level: Level 3

Topic: Corporate Governance and Financial Strategy

CSEG – Nov 2015 – L2 – Q2a – Corporate governance framework

Discuss how corporate governance practices impact CEO remuneration and the need to align CEO interests with those of shareholders.

Question

The remuneration of a CEO is usually a major issue for the Board of Directors in their discussions of corporate governance. Recently, the Chief Executive Officer of Unilever Ghana was awarded a significant salary and bonus, which exceeded the market average. This has raised concerns among some shareholders about the alignment of the CEO’s interests with those of the shareholders.

Required:

Discuss how corporate governance practices impact CEO remuneration and explain the need to align the CEO’s interests with those of shareholders. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: CEO Remuneration, Corporate Governance, Executive Compensation, Governance Practices, Shareholder Interests
Level: Level 2

Series: NOV 2015

FM – Nov 2018 – L3 – Q7 – Corporate Governance and Financial Strategy

Analyze potential agency conflicts between company owners and managers and methods to mitigate these issues.

Question

Required:

a. Agency conflicts may arise in various ways. Discuss four of these conflicts. (9 Marks)

b. State four methods by which problems arising from these conflicts could be reduced. (6 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Agency theory, Corporate Governance, Managerial Actions, Mitigation Strategies, Principal-Agent Conflict, Shareholder Interests
Level: Level 3

Topic: Corporate Governance and Financial Strategy

CSEG – Nov 2015 – L2 – Q2a – Corporate governance framework

Discuss how corporate governance practices impact CEO remuneration and the need to align CEO interests with those of shareholders.

Question

Required:

Discuss how corporate governance practices impact CEO remuneration and explain the need to align the CEO’s interests with those of shareholders. (10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: CEO Remuneration, Corporate Governance, Executive Compensation, Governance Practices, Shareholder Interests
Level: Level 2

Series: NOV 2015

Question Tag: Shareholder Interests

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FM – Nov 2018 – L3 – Q7 – Corporate Governance and Financial Strategy

Analyze potential agency conflicts between company owners and managers and methods to mitigate these issues.

CSEG – Nov 2015 – L2 – Q2a – Corporate governance framework

Discuss how corporate governance practices impact CEO remuneration and the need to align CEO interests with those of shareholders.

FM – Nov 2018 – L3 – Q7 – Corporate Governance and Financial Strategy

Analyze potential agency conflicts between company owners and managers and methods to mitigate these issues.

CSEG – Nov 2015 – L2 – Q2a – Corporate governance framework

Discuss how corporate governance practices impact CEO remuneration and the need to align CEO interests with those of shareholders.

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