Corporate governance is the system of internal controls and procedures by
which individual companies are managed.
Corporate Finance MCQ - Corporate Finance Section 1
Both creditors and shareholders desire high profits, however dividends are
only particular to shareholders.
A decision to venture into new markets would increase the company's
revenue and profits which is in the interest of both shareholders and
employees. In a takeover scenario, the management may fear losing their
employment; however, the offer may be attractive for shareholders.
Similarly, a proposal to redraft the bonus structure can create a conflict in
that shareholders would want to reduce expenses whereas the
management would want higher bonuses.
The board of director's responsibility is to protect shareholder interests
and ensure the management works in the best interest of shareholders.
Protecting management interests in front of shareholders is not a
responsibility of the board.
