International Transactions

Résumé du document

The most important objective for a financial manager is to maximize the wealth of the shareholders. Hundred of years ago, most of the companies were owned by a small group of shareholders, so making the financial decisions were easy. But nowadays companies are owned by diversified shareholders and so the control is separated from the ownership to another 'agent'. Decision-making about the corporate strategy are delegated under the authority of the financial manager. For example, if the manager wants to invest in news cars, it shows that the company is doing well but it will not maximize the shareholders wealth. As a result, shareholders are using different process in order to motivate managers to operate more in their direction. In this essay, we will highlight on three methods used to align managers behaviour to shareholders interest for their wealth maximization.

Extraits

[...] Appendices I. Managers VS Stockholders The most important objective for a financial manager is to maximize the wealth of the shareholders. Hundred years ago most of the companies were owned by a small group of shareholders so keep the financial decisions under control were easy. But nowadays companies are own by a bundle and diversified shareholders and so the control is separated from the ownership to another Decision-making about the corporate strategy are delegate under the authority of the financial manager. [...]

[...] In France for example companies are such in trouble with the syndicates that each time employees have been aware about the bonus of their manager it has made a conflict. In the book (Corporate Finance Eighth Edition Brealey / Myers / Allen), authors came to the result that “perhaps the high levels of executive pay in the United States simply reflect the competition to hire top executives”. Conclusion The main objective for the financial manger is to maximize the wealth of the shareholders. [...]

[...] Corporate finance http://cagle.msnbc.com Contents I. Managers VS Stockholders a. Share Option b. Giving Shares for Performance c. Bonus Tied to Profits II. Market for Corporate Control a. The More Appropriate Candidate b. Managers are Getting Anxious c. Golden Parachute III. [...]

[...] The revolution in corporate finance Third Edition Suk H. Kim and Seung H. Kim Global Corporate Finance Sixth Edition Robert F. Bruner Case Studies in Finance Second Edition Arnold Glen Corporate Financial Management Pearson Education Limited Web Bibliography http://financial-dictionary.com www.Financial-Dictionary.com http://news.bbc.co.uk (article I in appendix) www.bloomberg.com (article II in appendix) www.washingtonpost.com (article III in appendix) Other References Leeds Metropolitan University Corporate Finance Module Handbook 2007/2008 Applied Economics Letters 557-561 “Does the Market for Corporate Control hypothesis explain takeover targets” C. [...]

[...] This allows them to pick a date in history when the company share price was at a low point. The lower the share price when the option is granted, the greater the potential profit later on. While backdating is not illegal, it must be properly and clearly accounted for because it can give misleading profit figures or result in underpaid taxes. How the scandal emerged In May 2005, business professor Erik Lie had his article "On the timing of CEO stock option awards" published in the Management Science journal. [...]