principles of corporat finance—chap012.pptVIP

The ROI: return on investment rate menus minimal required discount rate r * * (Cash flow+PV end)/1.1=PV start Chapter 12 Agency Problems, Compensation, and Performance Measurement McGraw-Hill/Irwin Topics Covered Incentives and Compensation Measuring and Rewarding Performance: Residual Income and EVA Bias in Accounting Measures of Performance The Principal Agent Problem Shareholders = Owners Managers = Employees Jensen M.C. Meckling W. H .1976 Theory of the firm: Managerial behavior, agency costs and ownership structure, JFE, 3(4) 305-360 Causes of Principal-agent problem: Ownership and ope