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Incentive Problem and Consumption of Perquisites
Incentive ProblemManagers may have fixed salary and they may have no incentive to work hard and maximize shareholders wealth. It is as irrespective of the profits they make, their reward is set. Therefore they will maximize leisure and work less that is against the interest of the shareholders.Consumption of "Perquisites"Prerequisites consider to the high salaries and generous fringe benefits such the directors might award themselves. This will comprise director's remuneration that will shrink the dividends paid to the usual shareholders. Consequently the consumption of perquisites is against the interest of shareholders while it shrinks their wealth.
A manufacturing organisation has three production cost centres, the cutting department, the processing department and the finishing department, and two service cost centres, the st
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A Ltd.'s share gives a return of 20% and B Ltd.'s share gives 32% return. Mr. Gotha invested 25% in A Ltd.'s share and 75% of B Ltd.'s shares. What would be the expected return of
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what are the difference between receipt and payment account and income and expenditure account ?
Stock Repurchase The company can buy back also several of its outstanding shares instead of paying cash dividends. This is identified as stock repurchase and or bought back or
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