Sports Products, Inc for Management
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What should the management of Sports Products, Inc., pursue as its overriding goal? Why?
Does the firm appear to have an agency problem? Explain.
Evaluate the firm approach to pollution control. Does it seem to be ethical? Why might incurring the expense to control pollution be in the best interests of the firm's owners despite its negative effect on profits?
Does the firm appear to have an effective corporte governance structure? Explain any shortcomings.
On the basis of the information provided, what specific recommendations would you offer the firm?
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Solution Summary
The write up gives a learned discussion on Sports Products, Inc
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Step 1
The management of Sports Products, Inc should have the overriding goal of increasing shareholder value. The reason is that the management has been appointed on behalf of the shareholders to protect the assets of the shareholders, increase the assets of the shareholders, and make legitimate efforts to increase overall value of the firm. The management is in a fiduciary position and is responsible for enhancing the interests of the shareholders.
Step 2
The firm appears to have an agency problem. The first evidence is that even though the profits of the company were increasing the stock prices were declining. This indicates window dressing and other unethical means of showing higher profits even though the company has performed poorly. Accounting ...
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