How can accounting bonuses be an effective

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1 How can accounting bonuses be an effective means to align managers' incentives with shareholders'? Why isn't stock-based compensation sufficient?

2 Explain the role of stock options in creating incentives for executives.

3. Explain the practice of backdating options, and state why this practice is unethical.

4. How might the practice of granting golden parachutes to executives be in shareholders' interests?

5. Explain the horizon problem and the role it plays in conflicts between managers and shareholders.

6. Explain the role the takeover market plays in disciplining managers. How does a staggered board make a takeover more difficult?

7. What is a proxy fight? Given the costs of a proxy fight, why would activist shareholders wage these as part of an investment strategy?

8. What is a poison pill, and why does this strategy discourage a takeover?

9. Why should analysts be aware of anti-takeover amendments? Provide a scenario where such amendments would lead to a sell recommendation and one with a buy.

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