Give some examples of ways in which managers goals can differ from those of shareholders

Transcribed Image Text:1Give some examples of ways in which manager's goals can differ from those of shareholders. 2. From a liability point of view, what is the difference between investing in a sole proprietorship and a general partnership?

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    Why would managers interests differ from those of shareholders?

    Managers opt for the decision which will provide financial benefits to them such as incentives, bonuses and higher pay. However, shareholders are focused on increasing the net income of the company which ultimately increases the per-share earning of the shareholder.

    What is the difference between managers and shareholders?

    Shareholders are the “owners” of a company, and they benefit from the company's dividend payments and stock price appreciation. Managers are the agents of shareholders and manage the company on a daily basis.

    Are goals of shareholders and managers always the same?

    Stockholders and managers have their own goals for a company. In an ideal situation, managers' goals will be the same as the goals set forward by the stockholders via the board of directors. Unfortunately, this is not always the case.

    Can there be a conflict between shareholders and managers financial goals?

    Conflicts between a company's management and its shareholders are usually referred to as agency costs and are borne by shareholders. Activist shareholders and increased corporate governance increasingly deal with agency-related conflicts, but these conflicts can be especially intense for shareholders of smaller, ...

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