29.1: Stakeholder Management

Question 1

What is a staggered board of directors?

Answer 1

Board-related election process whereby directors are typically divided into multiple classes that are elected separately in consecutive years — that is, one class every year.

Question 2

What is the principal–agent relationship in corporations?

Answer 2

In corporations it is the shareholder-board of directors relationship.

Question 3

What are the Agency costs?

Answer 3

Costs associated with conflicts of interest between principals and agents when a company is managed by non-owners.

Question 4

What does “Perquisite consumption” refers to?

Answer 4

Items that executives may legally authorize for themselves that have a cost to shareholders, such as subsidized dining, a corporate jet fleet, and chauffeured limousines.

Question 5

Corporate ownership structures are generally classified as …

Answer 5

Dispersed, concentrated, or a hybrid of the two.