financial managment

It is sometimes argued that excess cash held by a firm can aggravate agency problems (this concept was discussed in Chapter 1), and more generally, reduce incentives for shareholder wealth maximization.

1. Do you think it is possible for a firm to have too much cash?
2. Are stockholders and creditors likely to agree on how much cash a firm should keep on hand? Explain.
3. What situations could transpire if conflicts exist about how much cash should be held?