More conflicts of interests(between managers and shareholder) for mature listed firms than young listed firms?

Question

More conflicts of interests(between managers and shareholder) for mature listed firms than young listed firms?

Answer 1

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Answer 2

I can certainly make a case that there is.

With young firms management normally has a greater vested interest in the firm prospering over the long term than management with a larger firm.  Why?  Because with larger firms managers normally get multi-million dollar salaries, bonuses, and stock options.

With smaller firms managers normally own a larger % of the outstanding stock and receive a lesser salary and bonus.

But you might argue that with the large bonuses and stock option awards given by the larger firms would not the managers have an incentive to also perform well?  Yes and no.

Many times their bonuses are tied to short term goals such as increasing the eps by such and such  a %.  They tend to do so by buying back stock using of all things borrowed money.  They will retire in 2 years with an absorbantent pension so what happens beyond that time period, they could care less.  As for the stock options,  I am certain you are aware of all the funny tricks that were used to award the stock options at artificially low prices.