Part 1: Stockholders and Managers
Stockholders and managers want the same thing, don’t they? Theoretically, yes, but in reality, it does not always work that way. Too often, managers’ personal goals compete with shareholder wealth maximization. Sometimes, managers pay themselves excessive salaries or bonuses that are at odds with the idea of shareholder wealth maximization. How many times have you seen in the news examples of CEO excesses or outlandish spending on events or things that definitely do not help the overall goal of stockholder wealth maximization?
To prepare for this Discussion, think about a time in your professional experience when a decision was made that seemed to benefit a specific manager or small group of managers and not the overall corporation. If you do not have professional experience directly related to this topic, research a situation in the news where this theme is demonstrated. Consider the outcomes of such an imbalance between manager and stockholder interests, and research how to avoid such a situation.
Describe the situation from either your professional experience or your research.
Explain two or more motivational tools that can aid in aligning stockholder and management interests.
Explain how your selected tools are effective in resolving potential conflicts among managers and stockholders.
Support your discussion with appropriate academically reviewed articles. Use APA format throughout.
Part 2: Chapters 5 and 6
Chapter 5 of the text presented extended concepts on time value of money including multiple cash flows analysis for investments, annuities, etc. Chapter 6 presents applications of time value of money in the valuation of bonds. Based on the knowledge gained from these two chapters, complete the following activities:
Review the narrated videos and Chapter 5 materials. Present a detailed discussion of what you learned from this chapter. Provide examples of how your company have used the concepts. Support your discussion with a numerical example. If you are not currently employed, provide examples of how you have used these concepts. Support your discussion with a numerical example.
Based on the materials presented in Chapter 6, present a discussion on why the materials are important in financial decision making. Support your discussion with a numerical example. You may solve one of the problems in this chapter as your numerical example