Agency problem
Agency problem also known as agency costs occurs in a two-party relationship (principal/agent) where the agent is expected to act or make decisions for the good of the principal.
For example in a corporate the relationship between the management and shareholders. The management is expected to make decisions that will maximize shareholders interest. The problem arises when the two parties have different interests. In the example above the manager may opt to make his own wealth and not act in the company’s best interest which could be maximizing company’s market value.
Examples of agency relationship in finance
Managers/stockholders
Managers/Creditors
Causes of conflicts between managers and stockholders may include;
Remuneration - low remunerations or fixed salaries despite increased profit margins.
Differences in risk profile- stockholders may prefer high-risk return investments contrary to the managers. When high-risk investment go bad the manager risks job loss
Manipulation of accounting systems- to reflect high profits.
Unnecessary perks management award themselves.
Solution to these problems include threat for firing in case of poor performance, shareholders may also threaten to sell the company, remuneration based on performance, incurring agency costs-these are costs incurred while hiring external auditors, setting a control system, legal costs for employment letters and contracts.
Agency problem may be reduced by motivating the manager to act for the companies best interest by offering incentives
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Answer:eh water could either be drained into the soil or land on plants to become dew
Explanation:i searched up what a watershed was lol
Answer:
Computer automation is used mostly by industry in factories. However, it is also useful in science. Machines can be used to run automated tests and complete simple tasks. One example of a machine used in science is the robotic arm that is used to handle radioactive samples.
Explanation:
Answer:
It will bend and grow towards the hole because the sunlight will shine through the hole and the plant will sense it so it will grow towards the light. I hope I could help you :)
Explanation:
Stomata allow for gas exchange on a leaf.
xylem and phloem are tissues that transport water and food throughout the plant.
pollen tubes transport the sperm to the egg.
