Separation between owners and managers

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A fundamental characteristic of a publicly listed corporation is the separation between owners and managers.

Required:

1. Discuss the rights, roles and responsibilities of the shareholders, board of directors and executive management.

2. Why might a business organisation seek listing as a publicly listed corporation? Include in your answer the advantages of the corporate form of business organisation.

3. Maximisation of shareholder value is a principal objective of an organisation. What is the relationship between this objective and the problems identified in agency theory?

4. A stock exchange provides a formal market that facilitates the flow of equity funds into the capital markets. Explain this flow-of-funds process from the perspective of a listed corporation raising equity finance.

5. Discuss the secondary market role of the equity market and its importance to the corporation. Demonstrate your answer through the use of examples.

6. What is meant by the liquidity of the equity market? Explain why liquidity in the secondary market is important to both shareholders and to the corporation.

Reference no: EM132459237

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