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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The arrangement favor the rotational movement around the vertical axis. Although it is possible to have some flexion, extension and lateral bending moments also.
Answer:
The everglades begins to start flooding
Explanation:
The everglades soon becomes a wetland and all the area has vast amounts of water making it harder to move on and why it has the wet season, which there is the most water.
Answer:I could be wrong but I think its magnetic pull
Explanation:
Answer:
Tropical Cyclones
Explanation:
Tropical Cyclones and Storm Surges
Mid-latitude cyclones, also called frontal cyclones, are large traveling low-pressure systems that develop along weather fronts (lines of separation between a cold air mass and a warm air mass) in the mid-latitudes (35°–55° N and S).
Hope this helps :)
