Evaluate ethical and financial implications of governance

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Reference no: EM132844807

The Goal Debate

Getting Started

"Governance" could be defined simply as the mechanisms used to control a corporation and thereby ensure it seeks to maximize the best interests of its stockholders. Stockholders are the ultimate owners of a corporation. They elect representatives, who sit on a Board of Directors, to oversee the company and to hire its top executives. These managers are acting as agents of the stockholders and are legally obligated (they have a fiduciary duty) to pursue the goals set out for them by the Board.
Nevertheless, despite even the best governance processes, there is always a temptation for managers to pursue their own self-interests instead of the interests of their stockholders. This is known as an "agency problem." Furthermore, it is not always clear what goals managers should pursue. The primary goals of corporations have been a subject of intense debate for nearly 100 years.

Upon successful completion of this discussion, you will be able to:

Question 1: Evaluate the ethical and financial implications of governance and agency problems.

Question 2: Analyze the appropriateness of various alternative primary goals for public corporations.

Reference no: EM132844807

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