Mona and Hamad work for Sports Products, a major company in the production of boat equipment and accessories. Mona works as a clerical assistant in the accounts department, and Hamad works as a packaging worker in the shipping department. And one day during lunch, they were talking about the company. Hamad complained that in his work he is always careful not to waste packaging and always does his work efficiently and cost-effectively. Despite the efforts he and his colleagues in the department made, the company's share price fell to about US $2 per share over the past nine months. Mona noted that she shared Shaikh Hamad's frustration, especially as the company's profits were increasing. Neither knew why the stock price of the company had fallen even though profits were increasing. Mona noted that she had seen ocuments describing the company's profit-sharing plan, under which all directors are compensated in part on the basis of the company's profits. It also suggested that profits might be an important factor for management; It directly affects the salaries of its members. Shaikh Hamad said: "This statement makes no sense; Because the shareholders own the company. Should not management do what is best for the benefit of shareholders? Something is wrong!" Mona replied, "Well, maybe that explains why the company itself is not interested in the stock price. The only dividends that shareholders receive are cash distributions, and the company has not paid dividends in its 20-year history. Therefore, we as shareholders do not directly benefit from the profits. The only way to benefit is for the share price to rise." Hamad shook his head and said, "This may explain why the company is being sued by local environmental officials for dumping pollutants in the nearby river. Why is money being spent to reduce pollution? It increases costs, reduces profits, and therefore reduces management returns!" Required: solve all they connected A. What should the management of SportsProducts pursue as its main objective And why? B. Does it look like the company has some kind of agency problem? Answer with explanation. C. Evaluates the company's approach to pollution reduction. Does it sound ethical? What are the best benefits that business owners can get from incurring pollution abatement costs on their own? D. Does the company seem to have an effective corporate governance structure Please explain any shortcomings? E. In light of the available information, what specific recommendations can you make to the company?
Mona and Hamad work for Sports Products, a major company in the production of boat equipment and accessories. Mona works as a clerical assistant in the accounts department, and Hamad works as a packaging worker in the shipping department. And one day during lunch, they were talking about the company. Hamad complained that in his work he is always careful not to waste packaging and always does his work efficiently and cost-effectively. Despite the efforts he and his colleagues in the department made, the company's share price fell to about US $2 per share over the past nine months. Mona noted that she shared Shaikh Hamad's frustration, especially as the company's profits were increasing. Neither knew why the stock price of the company had fallen even though profits were increasing. Mona noted that she had seen ocuments describing the company's profit-sharing plan, under which all directors are compensated in part on the basis of the company's profits. It also suggested that profits might be an important factor for management; It directly affects the salaries of its members. Shaikh Hamad said: "This statement makes no sense; Because the shareholders own the company. Should not management do what is best for the benefit of shareholders? Something is wrong!" Mona replied, "Well, maybe that explains why the company itself is not interested in the stock price. The only dividends that shareholders receive are cash distributions, and the company has not paid dividends in its 20-year history. Therefore, we as shareholders do not directly benefit from the profits. The only way to benefit is for the share price to rise." Hamad shook his head and said, "This may explain why the company is being sued by local environmental officials for dumping pollutants in the nearby river. Why is money being spent to reduce pollution? It increases costs, reduces profits, and therefore reduces management returns!" Required: solve all they connected A. What should the management of SportsProducts pursue as its main objective And why? B. Does it look like the company has some kind of agency problem? Answer with explanation. C. Evaluates the company's approach to pollution reduction. Does it sound ethical? What are the best benefits that business owners can get from incurring pollution abatement costs on their own? D. Does the company seem to have an effective corporate governance structure Please explain any shortcomings? E. In light of the available information, what specific recommendations can you make to the company?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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i beed the answers for question D and E plz .
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