Corporate Finance: Corporate Governance Flashcards

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1
Q

Corporate Governance Definition

A

Policies, principles, and procedures that are clearly defined in order for stakeholders (equity and management) to resolve conflicts.

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2
Q

Objectives of Corporate Governance

A
  1. Eliminate conflicts of interest between stakeholders
  2. Ensure that assets are used in best interest of investors and stakeholders
    2: 15
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3
Q

Principle Agent Problem

A

Managers (agents) may pursue interests that differ from the stake holders. 14:30

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4
Q

Good Corporate Governance Describes the Rights and/or Responsibilities of Stakeholders?

A
  • Rights only, not responsibilities.
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