Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Graded Assignment | Read Chapter 13 | Back to Assignment Due Tuesday 10.02.18 at 06:00 PM Attempts:5 Keep the Highest: 5/6 1. Agency conflicts and

image text in transcribed

Graded Assignment | Read Chapter 13 | Back to Assignment Due Tuesday 10.02.18 at 06:00 PM Attempts:5 Keep the Highest: 5/6 1. Agency conflicts and costs Aa Aa The nature and effects of agency conflicts Agency conflicts are a special example of a conflict of interest; specifically, they are created by the relationship between motivations of the different parties. The magnitude of these conflicts may be made larger or smaller by the environment in which they occur and the availability of techniques or events to prevent, reduce, or rectify them , and result from inconsistencies or disputes between the interests and For example, in businesses managed by professional managers, managers frequently have less financial and emotional commitment to the business than the firm's owners (the firm's common shareholders). The of ownership and management and the managers create an environment in which these conflicts can take root. of decision making by the owners to the professional Left unaddressed, these conflicts can produce significant real and opportunity costs that the firm's shareholders and other stakeholders must bear. Examples of management behaviors that are not in the best interests of the firm's shareholders include shirking, an excessive consumption of perquisites, an excessive concern with job security, reduced or excessive risk taking, and/or undertaking activities that are principally intended to expand or enhance a manager's ego, prestige, or power To prevent, reduce, or correct these conflicts between their managers and themselves, shareholders often have to incur additional real costs called costs

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Routledge Handbook Of Financial Technology And Law

Authors: Iris Chiu, Gudula Deipenbrock

1st Edition

0367344149, 978-0367344146

More Books

Students also viewed these Finance questions

Question

Write down the Limitation of Beer - Lamberts law?

Answered: 1 week ago

Question

Discuss the Hawthorne experiments in detail

Answered: 1 week ago

Question

Explain the characteristics of a good system of control

Answered: 1 week ago

Question

State the importance of control

Answered: 1 week ago

Question

Is conflict always unhealthy? Why or why not? (Objective 4)

Answered: 1 week ago