Professional Documents
Culture Documents
CHAPTER 1 Finance
Accounting (controller)
Is the area of finance concerned with the design
and delivery of advice and financial products to
individuals, businesses, and government. Major Difference:
Financial Services Accountants - accrual method
Financial manager
Goal of the Firm:
Financial manager
Finance
Share price = Future dividends (level timing) They hold and trade large quantities of
required Return (risk) securities for individuals, businesses, and
governments and tend to have a much greater
impact on corporate governance.
all groups of individuals who have a direct
Institutional investors
economic link to the firm including employees,
customers, suppliers, creditors, owners, and
others who have a direct economic link to the
Eliminated many disclosure and conflict of
firm.
interest problems that surfaced during the early
Stakeholders 2000s.
Corporate Governance
**Robert A. Cooke
Market Forces
Are investment professionals who are paid to
manage other peoples money.
Institutional investors
Are the costs borne by stockholders to maintain
a corporate governance structure that
minimizes agency problems and contributes to
the maximization of shareholder wealth.
Agency Costs
Stock option
these plans.
Performance plans
Are intermediaries that channel the savings of Once issued, securities then trade on the
individuals, businesses, and governments into
Secondary markets
loans or investments.
Financial institutions
Money market transactions can be executed
Bonds
Provide a forum in which suppliers of funds and
Common and preferred stock (equity)
demanders of funds can transact business
directly.
Eurobond market