Explain how each of the following affects corporate governance and whether the impact is positive or negative.
a. Block ownership
c. Stock options as part of compensation
d. High level of debt
e. Board of Directors comprised by majority of outsiders and compensating based in part on performance of company.
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Corporate governance refers to the process through which a company's objectives are set and are pursued. These objectives are pursued in the context of social, regulatory, and market environment.
Block ownership refers to owners of large amounts of company shares and bonds or blocks. They influence who is on the board of directors. Block ownership allows for better corporate governance because the block owners monitor the actions, policies, and decision of companies and their managers. Block ownership improves the accountability of business managers.
Greenmail occurs when a large block of stock is held by an unfriendly company that threatens a hostile ...
The solution to this problem explains corporate governance effects and how factors such as block ownership, greenmail, stock options, high level of debt and performance of the company affect corporate governance. The references related to the answer are also included.
Corporate Governance and Control
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