1 / 6

Corporate Governance: Does It Work?

Corporate Governance: Does It Work?. Economics 437. How are Public Companies Governed?. Board of Directors Hire Senior Management (in theory) Oversee Regulatory Filings (in theory) Supervise Firm Activity (in theory) Why Might There Be a Problem Absentee owners Principle/Agent problems

bess
Download Presentation

Corporate Governance: Does It Work?

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Corporate Governance: Does It Work? Economics 437

  2. How are Public Companies Governed? • Board of Directors • Hire Senior Management (in theory) • Oversee Regulatory Filings (in theory) • Supervise Firm Activity (in theory) • Why Might There Be a Problem • Absentee owners • Principle/Agent problems • Agent agendas

  3. Principal/Agent Problem • Shareholder is the principal • Management is the agent • Shareholders’ (economic) interests my be dramatically different that the (economic) interests of management • Acquisitions for “growth” or “diversification” • Executive compensation

  4. What things can improve corporate governance • The “reputation” theory • Legal requirement that management “act in the interests of shareholders” • Large shareholders • Large investors (LBOs) • Which of these work or don’t work

  5. Shleifer & Vishny conclude • Legal protections (fiduciary standards) help if enforced (US and UK) • Large shareholder (ala Germany & Japan) • LBOs help • But, outside of US, UK, Germany, and Japan shareholders protections are very, very inadequate

  6. End

More Related