Power Struggles and Corporate Governance Issues - Explained

The video explores how competition for authority within corporations can lead to governance issues. It highlights internal power struggles between boards and shareholders, especially when shares are concentrated among large shareholders or institutions. Activist shareholders often try to influence board decisions, leading to potential conflicts. The video also covers friendly takeovers, management buyouts, and the dynamics of leveraged and straight buyouts. It concludes with a discussion on private firms seeking control and the resulting takeover issues.

What is a common cause of power struggles within corporations?

• Lack of communication

• Concentration of shares in large shareholders

• Diverse product lines

• High employee turnover

How do activist shareholders typically try to influence a corporation?

• By increasing product prices

• By asserting influence on board decisions

• By reducing employee benefits

• By diversifying the company's portfolio

What is a management buyout?

• A merger with another company

• A purchase of a company by its own management

• A takeover by external investors

• A strategy to reduce company debt

What can lead to internal conflicts during a corporate takeover?

• Increased market share

• High employee satisfaction

• Existing board members' resistance

• Improved product quality

What is a leveraged buyout?

• A buyout using borrowed funds

• A buyout using only cash reserves

• A buyout by a competitor

• A buyout by a government entity