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1 ( Page view A Read aloud V Draw Highlight 3) a) Examine how the concepts of agency theory can be used to explain the
1 ( Page view A Read aloud V Draw Highlight 3) a) Examine how the concepts of agency theory can be used to explain the relationship that exists between the managers of a listed company and its shareholders. Your answer should include an explanation of the following: asymmetry of information; (5 marks] agency costs; [5 marks] b) The primary financial objective of a business is stated by corporate finance theory to be maximising shareholder wealth as against profit maximisation, sales maximisation, and maximisation of benefit to employees and the local community. Provide a reasoned argument in support that wealth maximisation should be the main goal of the financial manager. [15 marks 1 ( Page view A Read aloud V Draw Highlight 3) a) Examine how the concepts of agency theory can be used to explain the relationship that exists between the managers of a listed company and its shareholders. Your answer should include an explanation of the following: asymmetry of information; (5 marks] agency costs; [5 marks] b) The primary financial objective of a business is stated by corporate finance theory to be maximising shareholder wealth as against profit maximisation, sales maximisation, and maximisation of benefit to employees and the local community. Provide a reasoned argument in support that wealth maximisation should be the main goal of the financial manager. [15 marks
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