TEST BANK
vg
for Fundamentals of Corporate Finance 13th Edition Ross,
vg vg vg vg vg vg vg
vgWesterfield, and Jordan vg vg vg
Chapters 1 - 27 vg vg vg
,CHAPTERvg1:vgIntroductionvgtovgCorporatevgFinance
CHAPTERvg2:vgFinancialvgStatements,vgTaxes,vgAndvgCashvgFlow
CHAPTERvg3:vgWorkingvgwithvgFinancialvgStatements
CHAPTERvg4:vgLong-TermvgFinancialvgPlanningvgandvgGrowth
CHAPTERvg5:vgIntroductionvgtovgValuation:vgThevgTimevgValuevgofvgMoney
CHAPTERvg6:vgDiscountedvgCashvgFlowvgValuation
CHAPTERvg7:vgInterestvgRatesvgandvgBondvgValuation
CHAPTERvg8:vgStockvgValuation
CHAPTERvg9:vgNetvgPresentvgValuevgandvgOthervgInvestmentvgCriteria
CHAPTERvg10:vgMakingvgCapitalvgInvestmentvgDecisions
CHAPTERvg11:vgProjectvgAnalysisvgandvgEvaluation
CHAPTERvg12:vgSomevgLessonsvgfromvgCapitalvgMarketvgHistory
CHAPTERvg13:vgReturn,vgRisk,vgAndvgthevgSecurityvgMarketvgLine
CHAPTERvg14:vgCostvgofvgCapital
CHAPTERvg15:vgRaisingvgCapital
CHAPTERvg16:vgFinancialvgLeveragevgandvgCapitalvgStructurevgPolicy
CHAPTERvg17:vgDividendsvgandvgPayoutvgPolicy
CHAPTERvg18:vgShort-TermvgFinancevgandvgPlanning
CHAPTERvg19:vgCashvgandvgLiquidityvgManagement
CHAPTERvg20:vgCreditvgandvgInventoryvgManagement
CHAPTERvg21:vgInternationalvgCorporatevgFinance
CHAPTERvg22:vgBehavioralvgFinance:vgImplicationsvgforvgFinancialvgManage
CHAPTERvg23:vgEnterprisevgRiskvgManagement
CHAPTERvg24:OptionsvgandvgCorporatevgFinance
CHAPTERvg25:vgOptionvgValuation
CHAPTERvg26:vgMergersvgandvgAcquisitions
CHAPTERvg27:vgLeasing
,CHAPTER 1 vg
INTRODUCTION TO CORPORATE vg vg vg
FINANCE
AnswersvgtovgConceptsvgReviewvgandvgCriticalvgThinkingvgQuestions
1. Capitalvgbudgetingvg(decidingvgwhethervgtovgexpandvgavgmanufacturingvgplant),vgcapitalvgstructurevg(decidi
ngvgwhethervgtovgissuevgnewvgequityvgandvgusevgthevgproceedsvgtovgretirevgoutstandingvgdebt),vgandvgworkingv
gcapitalvgmanagementvg(modifyingvgthevgfirm’svgcreditvgcollectionvgpolicyvgwithvgitsvgcustomers).
2. Disadvantages:vgunlimitedvgliability,vglimitedvglife,vgdifficultyvginvgtransferringvgownership,vghardvgtovgrais
evgcapitalvgfunds.vgSomevgadvantages:vgsimpler,vglessvgregulation,vgthevgownersvgarevgalsovgthevgmanagers,vg
sometimesvgpersonalvgtaxvgratesvgarevgbettervgthanvgcorporatevgtaxvgrates.
3. Thevgprimaryvgdisadvantagevgofvgthevgcorporatevgformvgisvgthevgdoublevgtaxationvgtovgshareholdersvgofvgdistr
ibutedvgearningsvgandvgdividends.vgSomevgadvantagesvginclude:vglimitedvgliability,vgeasevgofvgtransferabilit
y,vgabilityvgtovgraisevgcapital,vgunlimitedvglife,vgandvgsovgforth.
4. InvgresponsevgtovgSarbanes-
Oxley,vgsmallvgfirmsvghavevgelectedvgtovggovgdarkvgbecausevgofvgthevgcostsvgofvgcompliance.vgThevgcostsvgtovg
complyvgwithvgSarboxvgcanvgbevgseveralvgmillionvgdollars,vgwhichvgcanvgbevgavglargevgpercentagev g ofv g av g sm
allv g firmsv g profits.v g Av g majorv g costv g ofv g goingv g darkv g isv g lessv g accessv g tov g capital.v g Sincev g thevgfirmvgisvg
novglongervgpubliclyvgtraded,vgitvgcanvgnovglongervgraisevgmoneyvginvgthevgpublicvgmarket.vgAlthoughvgthevgco
mpanyvgwillvgstillvghavevgaccessvgtovgbankvgloansvgandvgthevgprivatevgequityvgmarket,vgthevgcostsvgassociatedv
gwithvgraisingvgfundsvginvgthesevgmarketsvgarevgusuallyvghighervgthanvgthevgcostsvgofvgraisingvgfundsvginvgthevgp
ublicvgmarket.
5. Thev g treasurer’sv g officev g andv g thev g controller’sv g officev g arev g thev g twov g primaryv g organizationalv g
groupsv g thatvgreportvgdirectlyvgtovgthevgchiefvgfinancialvgofficer.vgThevgcontroller’svgofficevghandlesvgcostvga
ndvgfinancialvgaccounting,vgtaxvgmanagement,vgandvgmanagementvginformationvgsystems,vgwhilevgthevgtreas
urer’svgofficevgisvgresponsiblev g forv g cashv g andv g creditv g management,v g capitalv g budgeting,v g andv g financ
ialv g planning.v g Therefore,vgthevgstudyvgofvgcorporatevgfinancevgisvgconcentratedvgwithinvgthevgtreasuryvggrou
p’svgfunctions.
6. Tovgmaximizevgthevgcurrentvgmarketvgvaluevg(sharevgprice)vgofvgthevgequityvgofvgthevgfirmvg(whethervgit’svgpu
blicly-vgtradedvgorvgnot).
7. Invgthevgcorporatevgformvgofvgownership,vgthevgshareholdersvgarevgthevgownersvgofvgthevgfirm.vgThevgsharehol
dersvgelectvgthevgdirectorsvgofvgthevgcorporation,vgwhovginvgturnvgappointvgthevgfirm’svgmanagement.vgThisvgs
eparationvgofvgownershipvgfromvgcontrolvginvgthevgcorporatevgformvgofvgorganizationvgisvgwhatvgcausesvgagen
cyvgproblemsvgtovgexist.vgManagementvgmayvgactvginvgitsvgownvgorvgsomeonevgelse’svgbestvginterests,vgratherv
gthanvgthosevgofvgthevgshareholders.vgIfvgsuchvgeventsvgoccur,vgtheyvgmayvgcontradictvgthevggoalvgofvgmaximiz
ingvgthevgsharevgpricevgofvgthevgequityvgofvgthevgfirm.
8. Avgprimaryvgmarketvgtransaction.
, B-2v g SOLUTIONS
9. InvgauctionvgmarketsvglikevgthevgNYSE,vgbrokersvgandvgagentsvgmeetvgatvgavgphysicalvglocationvg(thevgexchan
ge)vgtovgmatchvgbuyersvgandvgsellersvgofvgassets.vgDealervgmarketsvglikevgNASDAQvgconsistvgofvgdealersvgop
eratingvgatvgdispersedvglocalesvgwhovgbuyvgandvgsellvgassetsvgthemselves,vgcommunicatingvgwithvgothervgdea
lersvgeithervgelectronicallyvgorvgliterallyvgover-the-counter.
10. Suchvgorganizationsvgfrequentlyvgpursuevgsocialvgorvgpoliticalvgmissions,vgsovgmanyvgdifferentvggoalsvgarevg
conceivable.vgOnevggoalvgthatvgisvgoftenvgcitedvgisvgrevenuevgminimization;vgi.e.,vgprovidevgwhatevervggoods
vgandvgservicesvgarevgofferedvgatvgthevglowestvgpossiblevgcostvgtovgsociety.vgAvgbettervgapproachvgmightvgbevgto
vgobservevgthatvgevenvgavgnot-for-
profitvgbusinessvghasvgequity.vgThus,vgonevganswervgisvgthatvgthevgappropriatevggoalvgisv g tovgmaximizevgthevg
valuevgofvgthevgequity.
11. Presumably,vgthevgcurrentvgstockvgvaluevgreflectsvgthevgrisk,vgtiming,vgandvgmagnitudevgofvgallvgfuturevgcashv
gflows,vgbothvgshort-termvgandvglong-term.vgIfvgthisvgisvgcorrect,vgthenvgthevgstatementvgisvgfalse.
12. Anvgargumentvgcanvgbevgmadevgeithervgway.vgAtvgthevgonevgextreme,vgwevgcouldvgarguevgthatvginvgavgmarketvge
conomy,vgallvgofvgthesevgthingsvgarevgpriced.vgTherevgisvgthusvganvgoptimalvglevelvgof,vgforvgexample,vgethicalvg
and/orvgillegalvgbehavior,vgandvgthevgframeworkvgofvgstockvgvaluationvgexplicitlyvgincludesvgthese.vgAtvgthevg
othervgextreme,vgwevgcouldvgarguevgthatvgthesevgarevgnon-
economicvgphenomenavgandvgarevgbestvghandledvgthroughvgthevgpoliticalvgprocess.vgAvgclassicvg(andvghighly
vgrelevant)vgthoughtvgquestionvgthatvgillustratesvgthisvgdebatevggoesvgsomethingvglikevgthis:vg“Avgfirmvghasvges
timatedvgthatvgthevgcostvgofvgimprovingvgthevgsafetyvgofvgonevgofvgitsvgproductsvgisvg$30vgmillion.vgHowever,vg
thevgfirmvgbelievesvgthatvgimprovingvgthevgsafetyvgofvgthevgproductvgwillvgonlyvgsavevg$20vgmillionvginvgprodu
ctvgliabilityvgclaims.vgWhatvgshouldvgthevgfirmvgdo?”
13. Thevggoalvgwillvgbevgthevgsame,vgbutvgthevgbestvgcoursevgofvgactionvgtowardvgthatvggoalvgmayvgbevgdifferentvgbe
causevgofvgdifferingvgsocial,vgpolitical,vgandvgeconomicvginstitutions.
14. Thevggoalvgofvgmanagementvgshouldvgbevgtovgmaximizevgthevgsharevgpricevgforvgthevgcurrentvgshareholders.vgI
fvgmanagementvgbelievesvgthatvgitvgcanvgimprovevgthevgprofitabilityvgofvgthevgfirmvgsovgthatvgthevgsharevgpricev
gwillvgexceedvg$35,vgthenvgtheyvgshouldvgfightvgthevgoffervgfromvgthevgoutsidevgcompany.vgIfvgmanagementvgb
elievesvgthatvgthisvgbiddervgorvgothervgunidentifiedvgbiddersvgwillvgactuallyvgpayvgmorevgthanvg$35vgpervgshar
evgtovgacquirevgthevgcompany,vgthenvgtheyvgshouldvgstillvgfightvgthevgoffer.vgHowever,vgifvgthevgcurrentvgmana
gementvgcannotvgincreasevgthevgvaluevgofvgthevgfirmvgbeyondvgthevgbidvgprice,vgandvgnovgothervghighervgbidsvg
comevgin,vgthenvgmanagementvgisvgnotvgactingvginvgthevginterestsvgofvgthevgshareholdersvgbyvgfightingvgthevgof
fer.vgSincevgcurrentvgmanagersvgoftenvglosevgtheirvgjobsvgwhenvgthevgcorporationvgisvgacquired,vgpoorlyvgmon
itoredvgmanagersvghavevganvgincentivevgtovgfightvgcorporatevgtakeoversvginvgsituationsvgsuchvgasvgthis.
15. Wevgwouldvgexpectvgagencyvgproblemsvgtovgbevglessvgseverevginvgothervgcountries,vgprimarilyvgduevgtovgthevgr
elativelyvgsmallvgpercentagevgofvgindividualvgownership.vgFewervgindividualvgownersvgshouldvgreducevgthevg
numbervgofvgdiversevgopinionsvgconcerningvgcorporatevggoals.vgThevghighvgpercentagevgofvginstitutionalvgo
wnershipvgmightvgleadvgtovgavghighervgdegreevgofvgagreementvgbetweenvgownersvgandvgmanagersvgonvgdecisi
onsvgconcerningvgriskyvgprojects.vgInvgaddition,vginstitutionsvgmayvgbevgbettervgablevgtovgimplementvgeffecti
vevgmonitoringvgmechanismsvgonvgmanagersvgthanvgcanvgindividualvgowners,vgbasedvgonvgthevginstitutions’v
gdeepervgresourcesvgandvgexperiencesvgwithvgtheirvgownvgmanagement.vgThevgincreasevginvginstitutionalvgo
wnershipvgofvgstockvginvgthevgUnitedvgStatesvgandvgthevggrowingvgactivismvgofvgthesevglargevgshareholdervggro
upsvgmayvgleadvgtovgavgreductionvginvgagencyvgproblemsvgforvgU.S.vgcorporationsvgandvgavgmorevgefficientvgm
arketvgforvgcorporatevgcontrol.
vg
for Fundamentals of Corporate Finance 13th Edition Ross,
vg vg vg vg vg vg vg
vgWesterfield, and Jordan vg vg vg
Chapters 1 - 27 vg vg vg
,CHAPTERvg1:vgIntroductionvgtovgCorporatevgFinance
CHAPTERvg2:vgFinancialvgStatements,vgTaxes,vgAndvgCashvgFlow
CHAPTERvg3:vgWorkingvgwithvgFinancialvgStatements
CHAPTERvg4:vgLong-TermvgFinancialvgPlanningvgandvgGrowth
CHAPTERvg5:vgIntroductionvgtovgValuation:vgThevgTimevgValuevgofvgMoney
CHAPTERvg6:vgDiscountedvgCashvgFlowvgValuation
CHAPTERvg7:vgInterestvgRatesvgandvgBondvgValuation
CHAPTERvg8:vgStockvgValuation
CHAPTERvg9:vgNetvgPresentvgValuevgandvgOthervgInvestmentvgCriteria
CHAPTERvg10:vgMakingvgCapitalvgInvestmentvgDecisions
CHAPTERvg11:vgProjectvgAnalysisvgandvgEvaluation
CHAPTERvg12:vgSomevgLessonsvgfromvgCapitalvgMarketvgHistory
CHAPTERvg13:vgReturn,vgRisk,vgAndvgthevgSecurityvgMarketvgLine
CHAPTERvg14:vgCostvgofvgCapital
CHAPTERvg15:vgRaisingvgCapital
CHAPTERvg16:vgFinancialvgLeveragevgandvgCapitalvgStructurevgPolicy
CHAPTERvg17:vgDividendsvgandvgPayoutvgPolicy
CHAPTERvg18:vgShort-TermvgFinancevgandvgPlanning
CHAPTERvg19:vgCashvgandvgLiquidityvgManagement
CHAPTERvg20:vgCreditvgandvgInventoryvgManagement
CHAPTERvg21:vgInternationalvgCorporatevgFinance
CHAPTERvg22:vgBehavioralvgFinance:vgImplicationsvgforvgFinancialvgManage
CHAPTERvg23:vgEnterprisevgRiskvgManagement
CHAPTERvg24:OptionsvgandvgCorporatevgFinance
CHAPTERvg25:vgOptionvgValuation
CHAPTERvg26:vgMergersvgandvgAcquisitions
CHAPTERvg27:vgLeasing
,CHAPTER 1 vg
INTRODUCTION TO CORPORATE vg vg vg
FINANCE
AnswersvgtovgConceptsvgReviewvgandvgCriticalvgThinkingvgQuestions
1. Capitalvgbudgetingvg(decidingvgwhethervgtovgexpandvgavgmanufacturingvgplant),vgcapitalvgstructurevg(decidi
ngvgwhethervgtovgissuevgnewvgequityvgandvgusevgthevgproceedsvgtovgretirevgoutstandingvgdebt),vgandvgworkingv
gcapitalvgmanagementvg(modifyingvgthevgfirm’svgcreditvgcollectionvgpolicyvgwithvgitsvgcustomers).
2. Disadvantages:vgunlimitedvgliability,vglimitedvglife,vgdifficultyvginvgtransferringvgownership,vghardvgtovgrais
evgcapitalvgfunds.vgSomevgadvantages:vgsimpler,vglessvgregulation,vgthevgownersvgarevgalsovgthevgmanagers,vg
sometimesvgpersonalvgtaxvgratesvgarevgbettervgthanvgcorporatevgtaxvgrates.
3. Thevgprimaryvgdisadvantagevgofvgthevgcorporatevgformvgisvgthevgdoublevgtaxationvgtovgshareholdersvgofvgdistr
ibutedvgearningsvgandvgdividends.vgSomevgadvantagesvginclude:vglimitedvgliability,vgeasevgofvgtransferabilit
y,vgabilityvgtovgraisevgcapital,vgunlimitedvglife,vgandvgsovgforth.
4. InvgresponsevgtovgSarbanes-
Oxley,vgsmallvgfirmsvghavevgelectedvgtovggovgdarkvgbecausevgofvgthevgcostsvgofvgcompliance.vgThevgcostsvgtovg
complyvgwithvgSarboxvgcanvgbevgseveralvgmillionvgdollars,vgwhichvgcanvgbevgavglargevgpercentagev g ofv g av g sm
allv g firmsv g profits.v g Av g majorv g costv g ofv g goingv g darkv g isv g lessv g accessv g tov g capital.v g Sincev g thevgfirmvgisvg
novglongervgpubliclyvgtraded,vgitvgcanvgnovglongervgraisevgmoneyvginvgthevgpublicvgmarket.vgAlthoughvgthevgco
mpanyvgwillvgstillvghavevgaccessvgtovgbankvgloansvgandvgthevgprivatevgequityvgmarket,vgthevgcostsvgassociatedv
gwithvgraisingvgfundsvginvgthesevgmarketsvgarevgusuallyvghighervgthanvgthevgcostsvgofvgraisingvgfundsvginvgthevgp
ublicvgmarket.
5. Thev g treasurer’sv g officev g andv g thev g controller’sv g officev g arev g thev g twov g primaryv g organizationalv g
groupsv g thatvgreportvgdirectlyvgtovgthevgchiefvgfinancialvgofficer.vgThevgcontroller’svgofficevghandlesvgcostvga
ndvgfinancialvgaccounting,vgtaxvgmanagement,vgandvgmanagementvginformationvgsystems,vgwhilevgthevgtreas
urer’svgofficevgisvgresponsiblev g forv g cashv g andv g creditv g management,v g capitalv g budgeting,v g andv g financ
ialv g planning.v g Therefore,vgthevgstudyvgofvgcorporatevgfinancevgisvgconcentratedvgwithinvgthevgtreasuryvggrou
p’svgfunctions.
6. Tovgmaximizevgthevgcurrentvgmarketvgvaluevg(sharevgprice)vgofvgthevgequityvgofvgthevgfirmvg(whethervgit’svgpu
blicly-vgtradedvgorvgnot).
7. Invgthevgcorporatevgformvgofvgownership,vgthevgshareholdersvgarevgthevgownersvgofvgthevgfirm.vgThevgsharehol
dersvgelectvgthevgdirectorsvgofvgthevgcorporation,vgwhovginvgturnvgappointvgthevgfirm’svgmanagement.vgThisvgs
eparationvgofvgownershipvgfromvgcontrolvginvgthevgcorporatevgformvgofvgorganizationvgisvgwhatvgcausesvgagen
cyvgproblemsvgtovgexist.vgManagementvgmayvgactvginvgitsvgownvgorvgsomeonevgelse’svgbestvginterests,vgratherv
gthanvgthosevgofvgthevgshareholders.vgIfvgsuchvgeventsvgoccur,vgtheyvgmayvgcontradictvgthevggoalvgofvgmaximiz
ingvgthevgsharevgpricevgofvgthevgequityvgofvgthevgfirm.
8. Avgprimaryvgmarketvgtransaction.
, B-2v g SOLUTIONS
9. InvgauctionvgmarketsvglikevgthevgNYSE,vgbrokersvgandvgagentsvgmeetvgatvgavgphysicalvglocationvg(thevgexchan
ge)vgtovgmatchvgbuyersvgandvgsellersvgofvgassets.vgDealervgmarketsvglikevgNASDAQvgconsistvgofvgdealersvgop
eratingvgatvgdispersedvglocalesvgwhovgbuyvgandvgsellvgassetsvgthemselves,vgcommunicatingvgwithvgothervgdea
lersvgeithervgelectronicallyvgorvgliterallyvgover-the-counter.
10. Suchvgorganizationsvgfrequentlyvgpursuevgsocialvgorvgpoliticalvgmissions,vgsovgmanyvgdifferentvggoalsvgarevg
conceivable.vgOnevggoalvgthatvgisvgoftenvgcitedvgisvgrevenuevgminimization;vgi.e.,vgprovidevgwhatevervggoods
vgandvgservicesvgarevgofferedvgatvgthevglowestvgpossiblevgcostvgtovgsociety.vgAvgbettervgapproachvgmightvgbevgto
vgobservevgthatvgevenvgavgnot-for-
profitvgbusinessvghasvgequity.vgThus,vgonevganswervgisvgthatvgthevgappropriatevggoalvgisv g tovgmaximizevgthevg
valuevgofvgthevgequity.
11. Presumably,vgthevgcurrentvgstockvgvaluevgreflectsvgthevgrisk,vgtiming,vgandvgmagnitudevgofvgallvgfuturevgcashv
gflows,vgbothvgshort-termvgandvglong-term.vgIfvgthisvgisvgcorrect,vgthenvgthevgstatementvgisvgfalse.
12. Anvgargumentvgcanvgbevgmadevgeithervgway.vgAtvgthevgonevgextreme,vgwevgcouldvgarguevgthatvginvgavgmarketvge
conomy,vgallvgofvgthesevgthingsvgarevgpriced.vgTherevgisvgthusvganvgoptimalvglevelvgof,vgforvgexample,vgethicalvg
and/orvgillegalvgbehavior,vgandvgthevgframeworkvgofvgstockvgvaluationvgexplicitlyvgincludesvgthese.vgAtvgthevg
othervgextreme,vgwevgcouldvgarguevgthatvgthesevgarevgnon-
economicvgphenomenavgandvgarevgbestvghandledvgthroughvgthevgpoliticalvgprocess.vgAvgclassicvg(andvghighly
vgrelevant)vgthoughtvgquestionvgthatvgillustratesvgthisvgdebatevggoesvgsomethingvglikevgthis:vg“Avgfirmvghasvges
timatedvgthatvgthevgcostvgofvgimprovingvgthevgsafetyvgofvgonevgofvgitsvgproductsvgisvg$30vgmillion.vgHowever,vg
thevgfirmvgbelievesvgthatvgimprovingvgthevgsafetyvgofvgthevgproductvgwillvgonlyvgsavevg$20vgmillionvginvgprodu
ctvgliabilityvgclaims.vgWhatvgshouldvgthevgfirmvgdo?”
13. Thevggoalvgwillvgbevgthevgsame,vgbutvgthevgbestvgcoursevgofvgactionvgtowardvgthatvggoalvgmayvgbevgdifferentvgbe
causevgofvgdifferingvgsocial,vgpolitical,vgandvgeconomicvginstitutions.
14. Thevggoalvgofvgmanagementvgshouldvgbevgtovgmaximizevgthevgsharevgpricevgforvgthevgcurrentvgshareholders.vgI
fvgmanagementvgbelievesvgthatvgitvgcanvgimprovevgthevgprofitabilityvgofvgthevgfirmvgsovgthatvgthevgsharevgpricev
gwillvgexceedvg$35,vgthenvgtheyvgshouldvgfightvgthevgoffervgfromvgthevgoutsidevgcompany.vgIfvgmanagementvgb
elievesvgthatvgthisvgbiddervgorvgothervgunidentifiedvgbiddersvgwillvgactuallyvgpayvgmorevgthanvg$35vgpervgshar
evgtovgacquirevgthevgcompany,vgthenvgtheyvgshouldvgstillvgfightvgthevgoffer.vgHowever,vgifvgthevgcurrentvgmana
gementvgcannotvgincreasevgthevgvaluevgofvgthevgfirmvgbeyondvgthevgbidvgprice,vgandvgnovgothervghighervgbidsvg
comevgin,vgthenvgmanagementvgisvgnotvgactingvginvgthevginterestsvgofvgthevgshareholdersvgbyvgfightingvgthevgof
fer.vgSincevgcurrentvgmanagersvgoftenvglosevgtheirvgjobsvgwhenvgthevgcorporationvgisvgacquired,vgpoorlyvgmon
itoredvgmanagersvghavevganvgincentivevgtovgfightvgcorporatevgtakeoversvginvgsituationsvgsuchvgasvgthis.
15. Wevgwouldvgexpectvgagencyvgproblemsvgtovgbevglessvgseverevginvgothervgcountries,vgprimarilyvgduevgtovgthevgr
elativelyvgsmallvgpercentagevgofvgindividualvgownership.vgFewervgindividualvgownersvgshouldvgreducevgthevg
numbervgofvgdiversevgopinionsvgconcerningvgcorporatevggoals.vgThevghighvgpercentagevgofvginstitutionalvgo
wnershipvgmightvgleadvgtovgavghighervgdegreevgofvgagreementvgbetweenvgownersvgandvgmanagersvgonvgdecisi
onsvgconcerningvgriskyvgprojects.vgInvgaddition,vginstitutionsvgmayvgbevgbettervgablevgtovgimplementvgeffecti
vevgmonitoringvgmechanismsvgonvgmanagersvgthanvgcanvgindividualvgowners,vgbasedvgonvgthevginstitutions’v
gdeepervgresourcesvgandvgexperiencesvgwithvgtheirvgownvgmanagement.vgThevgincreasevginvginstitutionalvgo
wnershipvgofvgstockvginvgthevgUnitedvgStatesvgandvgthevggrowingvgactivismvgofvgthesevglargevgshareholdervggro
upsvgmayvgleadvgtovgavgreductionvginvgagencyvgproblemsvgforvgU.S.vgcorporationsvgandvgavgmorevgefficientvgm
arketvgforvgcorporatevgcontrol.
