Financial Administrative Risk

The management decisions and the mistakes made by implementing decisions have a significant share into the company’s success and the failures. Manager in the business is not always expected to be highly qualified and excellent. Management errors can significantly affect the variables that determine the value of the stocks. The failures in the invesment decisions can increase the fixed costs. Increasing fixed costs of company causes to rise the business risk. The failures of management in collective labor contracts could result in a strike or lockout. The failure behaviour in the source selection of company affects to increase the financial risk. The prices of stocks in the companies increase with successful managers in the countries where the capital market developed. The administrative risk affects more the owners of the stock than bond holders. Therefore, persons or institutions who invest in stocks give great importance to the quality of business managers of company invested by persons and institutions.

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