| A | B |
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| Agency Problem | Potential conflicts of interest between a business' managers and stockholders or between managers and creditors. |
| Agency Relationship | An agency relationship develops whenever a principal (a company) engages an agent (a manager) and empowers him or her with decision-making power. |
| Capital Market | Financial markets where long-term financial securities such as stocks and bonds are traded. |
| Corporation | A legal entity created by a state, separate and distinct from its owners and managers, having unlimited life, easy transferability of ownership, and limited liability. |
| S Corporation | A small corporation which, under Subchapter S of the Internal Revenue Code, elects to be taxed as a proprietorship or a partnership yet retains limited liability and other benefits of the corporate form of organization. |
| Social Responsibility | The concept that businesses should be actively concerned with the welfare of society at large. |
| Sole Proprietorship | An unincorporated business owned by one individual |
| Partnership | An unincorporated business owned by two or more persons |
| Poison Pill | An action which will seriously hurt a company if it is acquired by another. |
| Profit Maximization | The maximization of the firm's net income |
| Proxy Fight | An attempt by a person or group to gain control of a firm by getting its stockholders to grant that person or group the authority to vote their shares to place a new management into office. |
| Publicly Owned Corporation | A corporation that is owned by a relatively large number of individuals who are not actively involved in its management. |
| Performance Share | Stock which is awarded to executives on the basis of the company's performance. |
| Proxy | A document gibing one person the authority to act for another, typically the power to vote share of common stock. |
| Executive Stock Option | An option to buy stock at a stated price within a specified time period that is granted to an executive as part of his or her compensation package |
| Stockholder Wealth Maximization | The primary goal for management decision; considers the risk and timing associated with expected earnings per share in order to maximize the price of the firm's common stock. |
| Hostile Takeover | The acquisition of a company over opposition of its management. |
| Risk | In a financial market context, the chance that an investment will not provide the expected return. |
| Money Market | Financial market where you go to borrow or lend funds for periods less than one year. |
| Business Ethics | A company's attitude and conduct toward its employees, customers, community, and stockholders |
