Corporate governance is a relationship among shareholders and is used to determine a firm’s direction and control its performance. To summarize what you have learned in this chapter, please answer the following questions:
- Why is governance necessary to control managers’ decisions?
- What is meant by the statement that ownership is separated from managerial control in the corporation? Why does this separation exist?
- How is each of the three internal governance mechanisms – ownership concentration, boards of directors and executive compensation – used to align the interests of managerial agents with those of the firm’s owners?
Your paper should be 1-2 pages in length.
Textbook Reference:
Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2016). Strategic management: Competitiveness and globalization (12th ed.). Mason, OH: South-Western Cengage
Learning. ISBN: 9781337364218
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