PHILOS 2N03 Lecture Notes - Lecture 8: Making Money, Insider Trading, Dive Bomber
Document Summary
Control of corporation is in hands of board of directors: fragmented ownership. Many shareholders, no *one* owns the company: divided functions and interests. Principal (shareholders: person or group who has arranged for someone else to act in their interest, shareholders have the right to . Agent (managers: someone who has agreed to act in someone else"s interest, also care about their own success, managers" duties. Duty of care and skill: the way you"re acting, accountant has to use correct numbers, use their skill. Wednesday, may 31, 2017: would break this if do job, just not doing it right. Problems in shareholder and manager relationships: different interests. Managers want money and power: e. g. shareholders want to pay managers as little as possible, managers want to make as much money as possible. Issue of power: both really want power, limos, dinner with pres, etc, limited resources. Appointing agent because do not have time.