Managerial compensation and the agency costs of debt finance

Article Abstract:

Bondholders, stockholders and managers compose the major elements in corporate structure. The financial relationships among these groups do not always coincide and this conflict of interest is called the agency cost of debt. Bondholders usually rely on stockholders to optimize the net worth of the firm but the major investment and production decisions are made by managers. The perception by managers that they are responsible to both bondholders and stockholders cause them to be cautious in their decisions. The result is that managers' compensation is not related to shareholder earnings.

Management, Stockholders, Executives

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Horizontal shareholding interlocks

Article Abstract:

Horizontal shareholding interlocks is the condition wherein firms own shares of stock of other firms within the same industry. Firms with interlocking ownerships which either compete with each other horizontally or within the same product level, can be classified as cartels. In the context of US law, shareholding interlocks violate antitrust legislation. There are some instances of large interindustry groupings with interlocking shareholdings, such as the keiretsu in Japan. It was indicated that firms with interlocking shareholdings tend to limit production, a characteristic of cartels.

Evaluation, Stocks, Interlocking directorates

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Limits on managerial discretion in management buyouts: the effectiveness of institutional, market and legal mechanisms

Article Abstract:

Cases of conflicts of interest in the 1980s involving shareholders and managers have highlighted the importance of laws pertaining to management buyouts. Management buyouts do not allow the emergence of competition due to several factors including preemptive bidding, transaction costs, and intentional actions by management. Legal, institutional and market methods have been created to regulate managerial discretion but are also counteracted by other factors which undermine their effectiveness.

Merger Regulation, Regulation, Licensing, and Inspection of Miscellaneous Commercial Sectors, Acquisitions and mergers, Corporation law, Industry regulations, Management buyouts, Government regulation of business, Trade regulation

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