Principals of Managerial Finance in Sports Products Inc Coursework

Principals of Managerial Finance in Sports Products Inc - Coursework Example Looking at the evidence provided, an agency problem indeed exists in Sports Products Inc. Managers seem unbothered about the falling share price and only interested in increasing the profits of the firm because all managers are partially compensated on the basis of the firm’s profits. The managers of the company have also never sanctioned payment of dividends because it shrinks the profits of the company. Thus, any rise in company profits only benefits the managers of the company.  The approach of Sports Products Inc. towards pollution control is very unethical because1. The actions of the firm do not conform to accepted moral standards.2. Alternative courses of action that are less likely to cause actual or potential harm do exist and the company is not implementing them in order to save money.Incurring the expense to control pollution might be in the best interests of Sports Products Inc’s owners despite its negative effect on profits.On the basis of the evidence pr ovided in the case, the corporate governance structure seems to be totally ineffective because a corporate governance structure ensures against dishonest acts of management and provides financial incentives to the managers to maximize share price (Gitman). But at Sports Products Inc. managers are not fulfilling their duties towards shareholders. The share price has fallen by nearly $2 per share over the past 9 months and the managers are still not doing anything to concern themselves with the price of the company’s stock.