3
Corporate IssuersModule 3 of 7

Corporate Governance: Conflicts, Mechanisms, Risks, and Benefits

5

Concepts

0

Formulas

1

Decisions

2

Quiz Questions

Key Concepts

5 concepts covered in this module.

Principal-Agent Conflict

Managers (agents) may not always act in shareholders' (principals') best interest. Monitoring and incentive alignment needed.

Controlling vs Minority Shareholders

Controlling shareholders may extract private benefits at minority shareholders' expense. Tunneling, related-party transactions.

Board of Directors

Elected by shareholders to oversee management. Key: independence, diversity, separation of CEO/Chair roles.

Governance Mechanisms

Internal: board, audits, compensation design, codes of conduct. External: regulations, market for corporate control, shareholder activism.

Shareholder Activism

Proxy fights, shareholder proposals, engagement with management. Hedge fund activism, ESG-focused activism.

Decision Frameworks

1 decision frameworks to guide your analysis.

Good vs Poor governance signals?

  • Good: independent board, separate CEO/Chair, transparent disclosure, aligned incentives
  • Red flags: dual-class shares, related-party transactions, weak audit committee

Mind Map

Visual overview of how concepts connect in this module.

Corporate Governance
Conflicts
Manager vs shareholder
Controlling vs minority
Shareholder vs creditor
Internal Mechanisms
Board of directors
Audit committee
Compensation design
Codes of conduct
External Mechanisms
Regulation/laws
Market for corporate control
Shareholder activism
Media/reputation
Board Quality
Independence
Diversity
CEO/Chair separation
Meeting frequency
Free Study Dashboard

Don't just read Corporate Governance: Conflicts, Mechanisms, Risks, and Benefits — practice it

Everything on this page becomes interactive on the study dashboard, free.

  • 6 interactive flashcards built from this page
  • 2 exam-style quiz questions with instant scoring
  • Progress tracking across all 7 Corporate Issuers modules
Open Study Dashboard

No signup required. Create an account anytime to save progress.

Try it right here

Flashcard

Principal-Agent Conflict

Tap to reveal the answer

Answer
Managers (agents) may not always act in shareholders' (principals') best interest. Monitoring and incentive alignment needed.
Sample 1 of 5
Study all 6 flashcards on the dashboard

Previous Module

Investors and Other Stakeholders

Next Module

Working Capital and Liquidity