文档介绍：Chapter Eleven
Corporate Performance, Governance, and Business Ethics
“There are worse things than war; and all of e with defeat.”
Ernest
Hemingway
© RoyaltyFree/ /Hanzon/ Getty Images
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Stakeholders and the Enterprise
Figure
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Identify stakeholders most critical to survival
Usually the most important:
Customers
Employees
Stockholders
Stakeholder Impact Analysis
Companies must identify the most important stakeholders and give highest priority to pursuing strategies that satisfy their needs.
4
Agency Theory
Principal-agent relationships
Principal: person delegating authority
Agent: person to whom authority is delegated
The agency problem
Agency relationships arise whenever one party delegates decision-making authority or control over resources to another.
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The agency problem
Agents and principals may have different goals.
Agents may pursue goals that are not in the best interests of their principals.
Agents may take advantage of information asymmetries to maximize their interests at the expense of principals.
It is difficult for principals to measure performance.
Trust
On-the-job consumption
Empire building
6
The Tradeoff Between Profitability and Revenue Growth Rates
Figure
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The Challenge for Principals
Principals try to deal with these challenges through a series of
governance mechanisms.
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Governance Mechanisms
The Board of Directors
Elected by stockholders
Legally accountable
Monitors corporate strategy decisions
Authority to hire, fire, pensate
Ensures accuracy of audited financial statements
Inside directors
Outside directors
Stock-pensation
Pay-for-performance
Stock options:
The right to pany shares at a predetermined price at some point in the future
Financial Statements
Auditors • SEC • GAAP
The Takeover Constraint
Limits strategies that ignore shareholder interests
Corporate raiders
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How Options Skew the Bottom Line
Table
Source: D. Henry and M. Conlin, “Too Much of a Good Incentive?” Busine