Corporate Finance: Corporate Governance

Question 1

Corporate Governance Definition

Answer 1

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

Question 2

Objectives of Corporate Governance

Answer 2

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

Question 3

Principle Agent Problem

Answer 3

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

Question 4

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

Answer 4

• Rights only, not responsibilities.