Corporate Governance quiz source, investor, effective, corporate

DoubleDip

What are some of the limitations of investor activism as a source of effective corporate governance?

Analti_Calte

We should take the test together then,,, i am sure well pass

NakedPuts00

1. Active Investors are unmonitored (their compensation is based on managed assets instead of performance, they are not subject to proxy fights and do not carry debt.)

2. They do not always have the same goals as shareholders and may not monitor effectively. Also if an active investor has a small portion of the firm's shares, may monitor less.

3.Can sell their stocks easily if they dont approve of the firm's management.



2 MORE LIMITATIONS>>>SOMEONE????

Windjammer

ITS NOT BS.... what you said is correct

skycfa

i strive to be an ethical wizard. i can't solve the long crazy math q's like most can on this forum. i make up for it in the fuzzy subjects.

Colum

No book...

1) Focus on short term performance rather than long term

2) Not used to being monitored

3) Don't have stocks tied to performance of frim and can easly sell them


I dunno!!!

canadiananalyst

no book- this might all be complete bs...
1. investor's goals may not be the same/aligned with the best interests of the company as a whole
2. most large investors are institutions that have many other things to do (think of some massive pension), essentially not a priority for them to effect change in a company
3. investor's time frame is shorter and can sell at any point- interests might be more ST than what is LT best for co.
4. costs vs benefits- not worth the time, effort, legal fees, etc. for a large holder to necessarily be an activist
5. who is monitoring the activist? no monitoring of the supposed monitor.