Reference no: EM1358101
Loren Seguara and Dale Johnson both work for Sports Products, Inc., a major producer of boating equipment and accessories. Loren works as a clerical assistant in the Accounting Department, and Dale works as a packager in the Shipping Department. During their lunch break one day, they began talking about the company. Dale complained that he had always worked hard trying not to waste packing materials and efficiently and cost-effectively performing his job. In spite of his efforts and those of his co-workers in the department, the firm's stock price had declined nearly $2 per share over the past 9 months. Loren indicated that she shared Dale's frustration, particularly because the firm's profits had been rising. Neither could understand why the firm's stock price was falling as profits rose. Loren indicated that she had seen documents describing the firm's profit-sharing plan under which all managers were partially compensated on the basis of the firm's profits. She suggested that maybe it was profit that was important to management, because it directly affected their pay.
Dale said, "That doesn't make sense, because the stockholders own the firm. Shouldn't management do what's best for stockholders? Something's wrong!" Loren responded, "Well, maybe that explains why the company hasn't concerned itself with the stock price. Look, the only profits that stockholders receive are in the form of cash dividends, and this firm has never paid dividends during its 20-year history. We as stockholders therefore don't directly benefit from profits. The only way we benefit is for the stock price to rise." Dale chimed in, "That probably explains why the firm is being sued by state and federal environmental officials for dumping pollutants in the adjacent stream. Why spend money for pollution control? It increases costs, lowers profits, and therefore lowers management's earnings!"
Loren and Dale realized that the lunch break had ended and they must quickly return to work. Before leaving, they decided to meet the next day to continue their discussion.
a. What should the management of Sports Products, Inc., pursue as its overriding goal? Why?
b. Does the firm appear to have an agency problem? Explain.
c. Evaluate the firm's 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?
d. Does the firm appear to have an effective corporate governance structure? Explain any shortcomings.
e. On the basis of the information provided, what specific recommendations would you offer the firm?
|
Prevention and treatment of schizophrenia
: Why is it possible for only one twin to have schizophrenia? What impact does this have on the prevention and treatment of schizophrenia?
|
|
What size of the labor force in a community
: The size of the labor force in a community is 500, and 400 of these folks are gainfully employed. In this community, 100 people over the age of 16 do not have a job.
|
|
Roi and persuasive arguments to see more possibilities
: You manage an investment center (evaluated based on the return on investment). Your production manager brings you a potential deal, a large piece of equipment that can help the company save money.
|
|
Financial statement application
: The information from these statements is used to analyze and establish budgets, forecast, variance reports, and ratios, among other things, with the key being that they are only used internally)
|
|
Evaluate the firm approach to pollution control
: Loren Seguara and Dale Johnson both work for Sports Products, Corporation, a major producer of boating machine and accessories. Loren works as a clerical assistant in the Accounting Department, and Dale works as a packager in the Shipping section.
|
|
Create microsoft access database
: Create a Microsoft Access database. Create the tables, fi elds, data types, and primary key(s) for the database. Create the relationship(s) needed between the tables.
|
|
Show classify labor costs
: Explain how would you classify these labor costs: Variable, Mixed, Step or Fixed Costs? Please defend your classification.
|
|
Developing a tax file memorandum
: Donovan Corporation, a calender year-end company, operates a profitable division in Jurisdiction A. In January 2010, Jurisdiction A enacted a tax law that changed the tax rate structure from 30% to 35%. Develop a tax file memorandum for a client ba..
|
|
Treatment plan for an individual having schizophrenia
: How do you present a treatment plan for an individual who has schizophrenia using family focused therapy and CBT?
|