incentive

Examples of incentive in the following topics:

• Advantages of Private Financing

  • Private financing can enhance a firm's capital structure, save on costs, and improve managerial incentive alignment.
  • Managerial incentives: In many instances it is the management which takes over and privately controls the company.
  • In this case, they have a more immediate incentive to improve the company's performance, because they are investors as well.

• Defining Agency Conflicts

  • Agency conflicts can occur when the incentives of the agent do not align with those of the principal.
  • Partly as a result of this separation, corporate governance mechanisms include a system of controls intended to help align managers' incentives with those of shareholders and other stakeholders.

• Managers, Shareholders, and Bondholders

  • Partly as a result of this separation, corporate governance mechanisms include a system of controls intended to help align managers' incentives with those of shareholders and other stakeholders.
  • For example, stockholders have an incentive to take riskier projects than bondholders do, as bondholders are more interested in strategies that will increase the chances of getting their investment back.

• Conflicts of Interest Between Shareholders and Bondholders

  • For example, stockholders have an incentive to take riskier projects than bondholders do , as bondholders are more interested in strategies that will increase the chances of getting their investment back.

• Drawbacks of Repurchasing Shares

  • Since compensation may be tied to reaching a high enough EPS number, there is an incentive for executives and management to try to boost EPS by repurchasing shares.

• Limitations of the Income Statement

  • For example, if a manager earns his or her bonus based on revenue levels at the end of December, there is an incentive to try to represent more revenues in December so as to increase the size of the bonus.

• Constraint on Managers

  • The limitation of free cash that managers have provides incentive for them to make decisions for the company that will grow the firm in value and increase the cash they have available to them to pay back debt, pay back into the firm, and compensate themselves.

• Control and Preemption

  • The incentive to exercise this option is based on the desire to protect individual ownership or stake in a company from dilution.

• Funding the International Business

  • They may act as advisers or objective investors, they may simply love the product, or they may have investment incentives (most commonly both).
  • Reimbursement in the form of credits, t-shirts, early access to the product, and other incentives are often used to motivated small investments.

• Conflicts Between Managers and Shareholders

  • Partly as a result of this, mechanisms of corporate governance include a system of controls that are intended to align the incentives of managers with those of shareholders.