Corporate Governance Risks company, question, personal, following, management

AnalystAlan

I missed a test question on this and thought you guys might want a quick refresher:

Per Reading 30, Pg. 240: Weak Corp. Governance systems pose the following risks to the value of a company:

Accounting Risk: Risks that Fin. Statements will contain error or disclosure is insufficient

Asset Risk: Risk that the firm's assets will be misappropriated by management for their own personal gain in the form of perquisites or compensation.

Liability Risk: Risk that management will enter into excessive obligations on behalf of the shareholders.

Strategic Policy Risk: Risk that managers will enter into transactions(e.g. M&A) that solely benefit themselves.

The most salient point is that risk regarding compensation is an asset risk.

ninja1024

Thanks, haven't reviewed this stuff in a while.

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