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a mechanism established to allow different parties to contribute capital, expertise, and labor for their mutual benefit
a mechanism established to allow different parties to contribute capital, expertise, and labor for their mutual benefit
corporation
participates in the profits of the enterprise without taking responsibility of the operations
participates in the profits of the enterprise without taking responsibility of the operations
investor/shareholder
runs the company without being responsible for personally providing the funds
runs the company without being responsible for personally providing the funds
Management
Owners
Owners
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Headed by the chief executive officer
Headed by the chief executive officer
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Elected by the shareholders to represent their interests
Elected by the shareholders to represent their interests
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► Relationship among stakeholders that is used to determine a firm’s direction and control on its performance.
▪ How firms monitor and control top-level managers’ decisions and actions affects the implementation of strategies
▪ Effective governance aligns manager’s decisions with shareholders’ interests can help produce a competitive advantage for the firm.
► Relationship among stakeholders that is used to determine a firm’s direction and control on its performance. ▪ How firms monitor and control top-level managers’ decisions and actions affects the implementation of strategies ▪ Effective governance aligns manager’s decisions with shareholders’ interests can help produce a competitive advantage for the firm.
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Three (3) Internal governance mechanisms are used in modern corporation:
Three (3) Internal governance mechanisms are used in modern corporation:
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- seeks to align the interests of managers and owners through salaries, bonuses and long-term cash incentives i.e. stock awards and options.
- seeks to align the interests of managers and owners through salaries, bonuses and long-term cash incentives i.e. stock awards and options.
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