0
What are the forces that causes the managers to act in the interest of the shareholders?
Wiki User
∙ 14y ago
There are many forces which will tend to create a convergence between the interests of stockholders and managers, and thus cause managers to be interested in maximizing a corporation's profits or value:
a. Competitive pressures could lead to stock price declines for nonperforming company, and again result in take overs, proxy contest, etc.
b. In many corporations, management remunerations are tied to the performance and managers frequently are awarded stock options which gain value as the price of shares rises. Thus, managers will have an interest in maximizing stockholder welfare.
c. Corporate shares are not only owned by widely dispersed stockholders but by large institutional holders such as: banks, insurance companies, mutual funds, pension funds, etc. These organizations employ analysts who continually study stock performance. Nonperforming companies would be sold from these institutions' portfolios, and lead to decreased prices of these stocks. This could lead to the dismissal of present management.
Wiki User
∙ 14y ago
Anonymous
What are the forces that causes the managers to act in the interest of the shareholders?
Add your answer:
Earn +20 pts
What forces have driven the changes in the role of managers changes in the last couple of decades?
Technological advancements and an increase in knowledge are the forces that have driven the changes to the role of managers in the last couple of decades.
Why is research necessary to assist managers in the decision making process?
By first doing research, managers can be sure that their decisions are based on actual data (and not guesswork) and that their decisions are relevant to actual market forces (and not only their imagination).
What are some changes that are impacting managers' jobs?
Two main groups of changes affect managers' jobs and are significant to an organization: external forces and internal forces. With external forces, the need for change comes from various sources outside the organization: marketplace, governmental laws and regulations, technology, labor markets, and economic changes. Internal forces originate from the internal operations of the organization or from the impact of external changes. They include redefining an organization's strategy, workforce, new equipment, and employee attitudes. Both types of changes are critical to the success of a manager and his/her organization.
Difference between public management and private management?
The main distinction between the private sector and the public sector is principally there ownership. Private sectors are owned by shareholders or entrepreneurs while public sectors are jointly owned by members of political communities. Public agencies are funded by taxation whereas private agencies are funded by the pay of their consumers. Public sectors are controlled by political forces and private sectors are controlled by market forces.
Which are criticisms of planning?
***Planning may create rigidity ***Planning cannot be developed in a dynamic environment ***A formal plan cannot replace intuition and creativity ***Planning focuses managers attention on today's competition not tomorrows survivors ***Formal planning re in forces success which may lead to failure. The following are the point of criticism of a planning. You can define it properly .
What forces have driven the changes in the role of managers changes in the last couple of decades?
Technological advancements and an increase in knowledge are the forces that have driven the changes to the role of managers in the last couple of decades.
what are competition and self-interest two important forces in?
Competition and self-interest are two important forces in market economies. Competition helps drive efficiency and innovation by encouraging firms to lower prices and improve quality to attract customers. Self-interest motivates individuals to work hard, innovate, and make decisions that benefit themselves, thus contributing to the overall growth and functioning of the economy.
Competition and self interest are two important forces in?
Competition and self-interest are two forces in free market economies.
What are the Advantages of system approach to management?
It forces managers to view their organization as part of a whole. It encourages managers to focus on better communication and cooperation within the organization. It makes managers acutely aware that good internal management of the organization may not be enough to ensure survival. It forces managers to be aware of how the environment affects specific parts of the organization.
What is organizational theory?
It is how managers are affected by outside forces and how they get their resources like raw materials.
What is meant by debt as a disciplinary mechanism?
Given the fact that debt has to be repaid and interest has to be paid, having corporate debt on the balance sheet forces managers to provide enough cash flows to service the debt obligations. Thus, these cash flows go to the debt holders and cannot be used for perks for the managers or for unprofitable empire building. Furthermore, debt covenants can restrict managers in their (self interest maximizing) decisions. Finally, if debt is provided by a large e.g. institutional lender, this lender may have such a large stake in the firm that the lender acts as a valuable monitor
What is organizational environment theory?
Organizational environment theory studies how external factors, such as economic, social, political, and technological conditions, influence organizations. It focuses on understanding how organizations can adapt and respond to changes in their external environment to remain competitive and successful. By analyzing these factors, organizations can better anticipate challenges and opportunities to develop effective strategies.
What forces causes movement?
gravity?
What causes static forces?
Friction is the force that causes static charge
Which one causes more movement balanced forces or unbalanced forces?
unbalenced
What is one way forces act on a atoms?
Forces causes bonds to form
Which four forces causes a airplane to become airborne?
There are two forces that causes an airplane to be airborne. They are Thrust and Lift. The other two forces resists the airplane's flight. They are Gravity and Drag.
