Corporate Governance: Conflicts, Mechanisms, Risks, and Benefits
Free CFA Level I lesson in Corporate Issuers. 13 min read, ~1,944 words.
Principal hires agent; agent has more information and may pursue self-interest. The classic conflict is shareholder (principal) vs manager (agent). Six conflicts to know: shareholder-manager, shareholder-board, controlling-minority, shareholder-creditor, manager-board, and friction with employees/customers/suppliers/regulators. Stakeholders span shareholders, managers, board, creditors, employees, customers, suppliers, regulators, and community. Internal mechanisms: independent board, key...
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What this lesson covers
- Content
- Example 1
- Example 2
- Common Mistakes
- Check Your Understanding
- Exam Shortcuts
Learning objectives
- corporate governance
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