1. Financial Markets and Corporate Strategy
Mark Grinblatt • Sheridan Titman Go
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2. Using this presentation
This PowerPoint presentation is a companion to the text Financial Markets and Corporate Strategy, by Mark Grinblatt and Sheridan Titman. It contains each Exhibit featured throughout all 23 chapters and Appendix A of the text. It is organized using the sections and subheadings of each chapter.
To simply browse through each chapter in order, use the “Forward” and “Back” buttons. To go to a specific chapter or section, use the “Index” button on the introductory screen.
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3. Part V Incentives, Information, and Corporate Control Back Forward
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4. Chapter 17: How Managerial Incentives Affect Financial Decisions Back
Part V Incentives, Information, and Corporate Control
Chapter 17:
How Managerial Incentives Affect Financial Decisions
Financial Markets and Corporate Strategy
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5. 17.1 The Separation of Ownership and Control
Chapter 17 How Managerial Incentives Affect Financial Decisions
17.1 The Separation of Ownership and Control
Whom Do Managers Represent?
What Factors Influence Managerial Incentives?
How Management Incentive Problems Hurt Shareholder Value
Why Shareholders Cannot Control Mangers
Changes in Corporate Governance
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6. 17.2 Management Shareholdings and Market Value
Chapter 17 How Managerial Incentives Affect Financial Decisions
17.2 Management Shareholdings and Market Value
The Effect of Management Shareholdings on Stock Prices
Management Shareholdings and Firm Value: The Empirical Evidence
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7. 17.3 How Management Control Distorts Investment Decisions
Chapter 17 How Managerial Incentives Affect Financial Decisions
17.3 How Management Control Distorts Investment Decisions
The Investment Choices Managers Prefer
Outside Shareholders and Managerial Discretion
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8. 17.4 Capital Structure and Managerial Control
Chapter 17 How Managerial Incentives Affect Financial Decisions
17.4 Capital Structure and Managerial Control
The Relation between Shareholder Control and Leverage
How Leverage Affects the Level of Investment
A Monitoring Role for Banks
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9. 17.5 Executive Compensation
Chapter 17 How Managerial Incentives Affect Financial Decisions
17.5 Executive Compensation
The Agency Problem
Is Executive Pay Closely Tied to Performance?
How Does Firm Value Relate to the Use of Performance-Based Pay?
Is Executive Compensation Tied to Relative Performance?
Stock-Based versus Earnings-Based Performance Pay
Compensation Issues, Mergers, and Spin-Offs
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10. Exhibit 17.1: CEOs with the Best and Worst Incentives (Part 1 of 2) CEOs of Large Companies with the Best Incentive Pay
Note: These observations come from a sample of CEOs in the 250 largest companies, ranked by 1988 sales.
Source: Jensen and Murphy (1990).
Financial Markets and Corporate Strategy
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Mark Grinblatt • Sheridan Titman

11. Exhibit 17.1: CEOs with the Best and Worst Incentives (Part 2 of 2) CEOs of Large Companies with the Worst Incentive Pay
Note: These observations come from a sample of CEOs in the 250 largest companies, ranked by 1988 sales.
Source: Jensen and Murphy (1990).
Financial Markets and Corporate Strategy
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Forward
Mark Grinblatt • Sheridan Titman

12. 17.6 Summary and Conclusions
Chapter 17 How Managerial Incentives Affect Financial Decisions
17.6 Summary and Conclusions
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