UB MGF 401 - chap001 (13 pages)

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chap001



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chap001

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Pages:
13
School:
University at Buffalo, The State University of New York
Course:
Mgf 401 - Financial Institutions

Unformatted text preview:

1 1 Chapter 1 Topics Covered Organizing a Business Goals of the Business Who Is the Financial Manager Investment and Financing Decisions McGraw Hill Irwin Copyright 2007 by The McGraw Hill Companies Inc All rights 1 2 Organizing a Business Types of Business Organizations Sole Proprietorships Partnerships Corporations Limited Liability Companies LLC McGraw Hill Irwin Copyright 2007 by The McGraw Hill Companies Inc All rights 1 3 Organizing a Business McGraw Hill Irwin Copyright 2007 by The McGraw Hill Companies Inc All rights 1 4 Liability Taxation Sole Proprietorships Partnerships Unlimited Liability Personal tax on profits Limited Liability Corporations Corporate tax on profits Personal tax on dividends LLC Limited Liability Personal tax on profits McGraw Hill Irwin Copyright 2007 by The McGraw Hill Companies Inc All rights 1 5 What is a Corporation Types of Corporations Public Corporation stock is publicly traded on stock exchange NYSE NASDAQ etc Private Corporation stock is held by limited number of stockholders and is not actively traded on stock exchange McGraw Hill Irwin Copyright 2007 by The McGraw Hill Companies Inc All rights 1 6 Goals of The Corporation Shareholders desire wealth maximization Do managers maximize shareholder wealth Managers have many constituencies stakeholders Agency Problems represent the conflict of interest between management and owners McGraw Hill Irwin Copyright 2007 by The McGraw Hill Companies Inc All rights 1 7 Goals of The Corporation Ethics Management Objectives Does value maximization justify unethical behavior Enron example hid 1 7 billion in losses using special accounting rules for off balance sheet operations WorldCom example overstated income by 3 8 billion McGraw Hill Irwin Copyright 2007 by The McGraw Hill Companies Inc All rights 1 8 Goals of The Corporation Agency Problem Solutions 1 Compensation plans 2 Board of Directors 3 Takeovers 4 Specialist Monitoring 5 Auditors McGraw Hill Irwin Copyright 2007 by The McGraw



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