The actions that stockholders can take to ensure that the management and stockholder’s interests are aligned. Introduction: Stockholders: Stockholders are the owner of the company who invest funds in the business. Stockholders have the voting right and control over the management. The relationship between the stockholder and manager is like the relationship of principal and agent Managers : Managers are the agent of the stockholders who perform for the stockholders. The mangers should not do any such action which is detrimental to the interest of the stockholders. There can be a situation where conflicts may arise between manager’s personal interest and stockholders interest, in such situation the priority should be given to the stockholders interest.

Question

What are some actions that stockholders can take to ensure that management’s and stockholders’ interests are aligned?

Answer 1

Question

Chapter 1, Problem 8Q

Summary Introduction

To identify: The actions that stockholders can take to ensure that the management and stockholder’s interests are aligned.

Introduction:

Stockholders: Stockholders are the owner of the company who invest funds in the business. Stockholders have the voting right and control over the management. The relationship between the stockholder and manager is like the relationship of principal and agent

Managers: Managers are the agent of the stockholders who perform for the stockholders. The mangers should not do any such action which is detrimental to the interest of the stockholders. There can be a situation where conflicts may arise between manager’s personal interest and stockholders interest, in such situation the priority should be given to the stockholders interest.

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Answer 2

Question

Chapter 1, Problem 8Q

Summary Introduction

To identify: The actions that stockholders can take to ensure that the management and stockholder’s interests are aligned.

Introduction:

Stockholders: Stockholders are the owner of the company who invest funds in the business. Stockholders have the voting right and control over the management. The relationship between the stockholder and manager is like the relationship of principal and agent

Managers: Managers are the agent of the stockholders who perform for the stockholders. The mangers should not do any such action which is detrimental to the interest of the stockholders. There can be a situation where conflicts may arise between manager’s personal interest and stockholders interest, in such situation the priority should be given to the stockholders interest.

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Answer 3

Question

Chapter 1, Problem 8Q

Summary Introduction

To identify: The actions that stockholders can take to ensure that the management and stockholder’s interests are aligned.

Introduction:

Stockholders: Stockholders are the owner of the company who invest funds in the business. Stockholders have the voting right and control over the management. The relationship between the stockholder and manager is like the relationship of principal and agent

Managers: Managers are the agent of the stockholders who perform for the stockholders. The mangers should not do any such action which is detrimental to the interest of the stockholders. There can be a situation where conflicts may arise between manager’s personal interest and stockholders interest, in such situation the priority should be given to the stockholders interest.

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Answer 4

Question

Chapter 1, Problem 8Q

Summary Introduction

To identify: The actions that stockholders can take to ensure that the management and stockholder’s interests are aligned.

Introduction:

Stockholders: Stockholders are the owner of the company who invest funds in the business. Stockholders have the voting right and control over the management. The relationship between the stockholder and manager is like the relationship of principal and agent

Managers: Managers are the agent of the stockholders who perform for the stockholders. The mangers should not do any such action which is detrimental to the interest of the stockholders. There can be a situation where conflicts may arise between manager’s personal interest and stockholders interest, in such situation the priority should be given to the stockholders interest.

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Answer 5

Chapter 1, Problem 8Q

Summary Introduction

To identify: The actions that stockholders can take to ensure that the management and stockholder’s interests are aligned.

Introduction:

Stockholders: Stockholders are the owner of the company who invest funds in the business. Stockholders have the voting right and control over the management. The relationship between the stockholder and manager is like the relationship of principal and agent

Managers: Managers are the agent of the stockholders who perform for the stockholders. The mangers should not do any such action which is detrimental to the interest of the stockholders. There can be a situation where conflicts may arise between manager’s personal interest and stockholders interest, in such situation the priority should be given to the stockholders interest.

Answer 6

Chapter 1, Problem 8Q

Summary Introduction

To identify: The actions that stockholders can take to ensure that the management and stockholder’s interests are aligned.

Introduction:

Stockholders: Stockholders are the owner of the company who invest funds in the business. Stockholders have the voting right and control over the management. The relationship between the stockholder and manager is like the relationship of principal and agent

Managers: Managers are the agent of the stockholders who perform for the stockholders. The mangers should not do any such action which is detrimental to the interest of the stockholders. There can be a situation where conflicts may arise between manager’s personal interest and stockholders interest, in such situation the priority should be given to the stockholders interest.

Answer 7

Chapter 1, Problem 8Q

Summary Introduction

To identify: The actions that stockholders can take to ensure that the management and stockholder’s interests are aligned.

Introduction:

Stockholders: Stockholders are the owner of the company who invest funds in the business. Stockholders have the voting right and control over the management. The relationship between the stockholder and manager is like the relationship of principal and agent

Managers: Managers are the agent of the stockholders who perform for the stockholders. The mangers should not do any such action which is detrimental to the interest of the stockholders. There can be a situation where conflicts may arise between manager’s personal interest and stockholders interest, in such situation the priority should be given to the stockholders interest.

Answer 8

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Solution Summary: The author explains the actions that stockholders can take to ensure that the management's interests are aligned. The compensation package should be attractive and rewarded on the basis of the performance of stock.

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