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DEFINITION OF TERMS
fire Managers)
2.
and
SHAREHOLDERS VERSUS
MANAGERS
CONTINUATION----
1.
2.
3.
Market
Forces:
Institutional
shareholders
actively use their votes to oust underperforming
managers. Also, possibility of hostile takeovers
Agency Costs:
1. Monitoring Expenditures
2. Restructuring costs
3. Opportunity Costs
.Managerial Incentives: Design compensation
scheme such that it rewards managers for doing
the right thing i.e maximizing the wealth for the
shareholders
1. Executive stock options
2. Performance Plans e.g performance shares and
cash bonuses
sackings
2. STOCKHOLDERS AND
BONDHOLDERS
1.
2.
3.
4.
11
END
12