StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Advanced corporate finance - Essay Example

Cite this document
Summary
A manager always intends to maximize the share price of the company, not only because their incentives depend on the same but also because they need to experience continuous pressure to facilitate investor returns. It is owing to this reason that managers often implement…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER96.6% of users find it useful
Advanced corporate finance
Read Text Preview

Extract of sample "Advanced corporate finance"

Download file to see previous pages

In such scenarios, three forms of remunerations can be noteworthy. The first among these is the ‘share based compensation model’ that helps the managers as well as the employees to serve for better growth in the share pieces of a company, without affecting the cash reserves and therefore, ensuring financial stability. Nevertheless, the management may be concerned about the fact that potential hostile bidders may bid for the company in case it maintains a lower share price, whilst increasing price is certain to prohibit such take-overs.

It is also likely that the short-term shareholders may create pressure for achieving the returns that will create a potential damage for the company through the reduction of its intrinsic value. Majority of the times managers have to face pressure from the top-level management as well. Notably, as the shareholders always seek for a high dividend from the company, in order to retain these investors as well as increase their numbers, managers often get lured to deliver constantly increasing profit margin that in turn tends to facilitate returns, which may benefit the shareholders but will create potential damage to the company in long run.

It is thus that a manager may unintentionally harm the company by increasing the dividends irrespective of insufficient cash reserves or increase in the leverages. Manager’s loyalty and satisfaction from the company, indicating his/her intention to be a part of the entity, also play vital roles influencing their strategic intents to increase current share prices. From debt-holders, shareholders can expropriate wealth in various forms, which mainly include underinvestment, asset substitution and shortsighted investment among others.

For example, underinvestment can take place if the Net Present Value (NPV) is lesser than the debt to be borne by the investors. Assuming that two economies have equal rate of yield earned from

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Advanced corporate finance Essay Example | Topics and Well Written Essays - 1250 words”, n.d.)
Advanced corporate finance Essay Example | Topics and Well Written Essays - 1250 words. Retrieved from https://studentshare.org/finance-accounting/1674479-advanced-corporate-finance
(Advanced Corporate Finance Essay Example | Topics and Well Written Essays - 1250 Words)
Advanced Corporate Finance Essay Example | Topics and Well Written Essays - 1250 Words. https://studentshare.org/finance-accounting/1674479-advanced-corporate-finance.
“Advanced Corporate Finance Essay Example | Topics and Well Written Essays - 1250 Words”, n.d. https://studentshare.org/finance-accounting/1674479-advanced-corporate-finance.
  • Cited: 0 times

CHECK THESE SAMPLES OF Advanced corporate finance

School Finance in New Jersey

School finance in New Jersey School Affiliation: Ratables for the 2006 School Year in New Jersey Ratables can be defined as the amount income earned over a certain period through exchange of products and services; an income that is subject to taxation.... The state uses tax levied on New Jersey's property market to finance free education for elementary and high school students.... Also, it has led to a loss of about $846 million that was allocated for school finance New Jersey state (New Jersey School Board Association, 2010)....
3 Pages (750 words) Essay

Relating Of Finance Available For Marc Day And SwapgameCom

An essay "Relating Of finance Available For Marc Day And SwapgameCom" reports that when starting a business the initial response was positive but private investors, and venture capital companies, needed to see extra experienced management in the company, thus not willing to help.... Internal sources of finance The sources identified for 2008, are appropriate and easily achievable, as the funds such as savings come from the owner, and a viable business plan can earn the business loans from the banks, to start up....
6 Pages (1500 words) Essay

Advance coorperate finance

his is the amount that helps the company to analyze the profitability of the company as the expenses … Advance corporate finance Valuation The free cash flow is the measurement through which the financial performance of a firm can be detected.... The free cash flow is the measurement through which the financial performance of a firm can be detected....
3 Pages (750 words) Essay

Master in Finance Admissions Essays

I believe that MPhil in finance offers an opportunity to combine finance and economics with mathematics and help me develop a strong background for a career integrating chemical engineering and finance.... I plan to work in a field that would integrate chemical engineering and finance, and help promote industry growth in high-technology-related areas.... In the Department of corporate Research at Unilever, I grasped how research projects are chosen and financed based on customer preferences....
5 Pages (1250 words) Essay

Capital Structure of CVS

In the paper “Capital structure of CVS” the author analyzes the way a corporation CVS finances itself through some combination of equity, debt, and loans.... Optimal capital structure refers to the balanced trade-off that minimizes the cost of capital while maximizing the stock price....
2 Pages (500 words) Assignment

Unit Trusts and Open-Ended Investment Companies

Unit trusts are taxed in the same way as the underlying investments which the trust holds, whether cash, corporate bonds, or shares.... This paper focuses on unit trusts and open-ended investment companies.... It discusses their benefits, pricing structures, legal structures, and taxation....
9 Pages (2250 words) Coursework

Advanced Corporate Finance - 'Company Valuation is an art not a Science.'

Companies require keeping in mind a number of factors while planning the sell, and these factors are very important for the company.... Similarly it is very essential for the companies to understand their own… Here an understanding of the valuation of companies has been discussed and, an analysis of the concept has been made, to analyse whether valuation is an art or science (Horn, 2008)....
5 Pages (1250 words) Essay

Analyze the def-14a by JPMorgan of advanced corporate finance

Morgan of Advanced corporate finance JP Morgan Company's risk management team looks like it has what can be termed as a qualified one based on its background.... The members of the risk management team are well qualified, for instance given that Linda Bammann, who was the deputy head of JPMorgan risk management team… since 2004 to 2005, has worked at high positions in different entities previously, including serving as a chief risk management officer before her job in JPM....
2 Pages (500 words) Term Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us