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BWL (Fach) / Corporate Governance (Lektion)
Corporate Governance SS2019
Diese Lektion wurde von lncls erstellt.
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- Estimated vs. realized CEO pay Estimated = salary + bonus + restricted stock + expected value of optionsRealized = salary + bonus + restricted stock + value of options exercised/realized -> realized reflectes pay granted over multiple years
- Elements of a CMS - Compliance Culture- Compliance Objectives- Compliance Risks- Compliance Program- Compliance Organization- Compliance Communicatoin- Compliance Monitoring and Improvement- Compliance Culture
- (CMS) Requirements when defining compliance objectives - Consistency- Comprehensibility & practicability- Merasurability- Coordination
- (CMS) Compliance risk example factors and options - changes in economic/legal environment- personnel changes- above-average growth of entitiy- new technologies- new or atypical business areas/products- restructuring- locations of business activities- expansion- prevention- mitigation- transfer- acceptance
- (CMS) compliance program - policies & procedures aimed at limiting risks & promoting compliant behavior- risk identification procedures & responses- ensure timely communication and analysis of root causes in case of breach include integrated controls:- segregation of duties- authorization concepts- approval processes and signing policies- asset protection arrangements, security controls- independent counter-controls- job rotation
- (CMS) Compliance organization - definition of roles/responsibilities- ensure sufficient resources- operation integration of CMS- organizational and technical instrumentalities (manuals, checklists, it tools)
- (CMS) Compliance Communication - communication of concerned persons- definition of reporting duties and channels- communication of monitoring results
- (CMS) Compliance Monitoring aspects - determining responsibilities- development of monitoring plan- provision of experienced resources- designation of reporting channels- preparation of reports on results and evaluation of those
- (CMS) Compliance Improvement - measures to increase effectiveness (more intensive communication of program, additional controls) In case of incidents:- additional training- consideration of compliance information in employee appraisals and promotion- termination
- (CMS) Stages of CMS implementation Analysis stage Development stage Launch stage Application stage
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- What is the participation constraint and what is the incentive compatibility constraint? Participation constraint: Bedingung, dass der Agent überhaupt den Auftrag annimtIncentive compatibility constraint: Bedingung, dass die Incentive auf den Agenten wirkt (z.B. dass er High Effort arbeitet)
- Why do agency costs arise? Conflicts of interest and asymmetric information between the contracting parties
- Basic ingredients of a moral hazard problem 1. Principal and agent are involved in a bilateral relationship2. Principal delegates a task to the agent3. Agent has discretion: he can choose the level of effort4. Outcome of the task depends on effort and luck5. Principal cannot observe the effort (hidden6. Principal must motivate the agent by paying him based on the outcome
- What is the relationship-specific investment? Investments only occuring when relationships work out - gains when relationship does not work out
- What is quasi-rent? What are results of its existence? Why does it exist? Profit first best - Profit next best - If there is no quasi rent, then the next best alternative to the current contract offers thesame profit such that there is no rent for the trading partner to extract- If there is a quasi rent, then the trading partner has stronger bargaining power and canattempt to extract this rent (creating the hold up problem) - Because contracts are incomplete- Because the relationship specific investment assets associated with the contractcannot be easily used for other purposes by the contracting partner.
- Interpretation Log-Regressionskoeffizienten log(y) = b*log(x)-> Änderung von X um 1% führt zu Änderung von Y in Höhe von b% log(y) = b*x-> Änderung von X um 1 führt zu Änderung von Y in Höhe von 100*b% y=b*log(x)-> Änderung von X um 1% führt zu Änderung von Y in Höhe von b/100. -> alles c.p.
- Consequences of Transfer of Control regulations Market rule- inefficient transfers not prevented- efficient transfers always happen Mandatory bid rule- inefficient transfers prevented- efficient transfers sometimes dont happen
- Two opposing effects of managerial firm ownership Incentive alignment vs. managerial enrichment
- What is an relationship specific investment? RSI is the amount of the investment that cannot be recovered if the contract is not fulfilled.