How does the separation of ownership and control in public stock companies present a problem? Provide an example of this problem from your reading in this class, your reading outside of class, or your own experience.
What will be an ideal response?
Student examples will vary. A sample answer follows.
The separation of ownership and control is one of the major advantages of the public stock companies. This benefit, however, is also the source of the principal-agent problem. In publicly traded companies, the stockholders are the legal owners of the company, but they delegate decision-making authority to professional managers. The conflict arises if the agents pursue their own personal interests, which can be at odds with the principals' goals. For their part, agents may be more interested in maximizing their total compensation, including benefits, job security, status, and power.
An example of the problems related to the separation of ownership and control in public stock companies is Raj Rajaratnam's insider trading, which resulted in his being sentenced to 11 years in prison.
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You have been asked to create a product system for your company's personal digital assistant. Before starting, you must define the term "product system" to the engineers to enable them to start design and production of the aligned items
Define the concept of a "product system."
Solve for the base, rounding answer to hundredths, or the nearest cent if necessary: 1.13 is 138% of _____.
What will be an ideal response?
Manufacturers' agents
A. usually handle a full assortment of products from competing manufacturers. B. typically have a temporary relationship with a manufacturer, until a specific item is sold. C. usually handle products for only a few companies since the cost of adding additional lines is quite high. D. buy large inventories from small manufacturers-helping them acquire working capital. E. are frequently used by manufacturers to help introduce a new product.
Answer the following statement(s) true (T) or false (F)
1. In a stock acquisition, the acquiring corporation becomes a subsidiary of the target corporation. 2. The purchasers in an asset acquisition will generally not be held liable for undisclosed liabilities and obligations of the target corporation stemming from prior transactions. 3. In a stock purchase agreement, it is not necessary to identify in detail the exact assets and liabilities of the selling corporation. 4. In states following the Model Business Corporation Act, the shareholders of a corporation need not approve the restatement of the articles of incorporation if no amendment to provisions of the articles is included.