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conflicts between a shareholders goals ana a managers goal may arise when the shareholder decides to by-pass the principle of agency theory which states that the mangers and shareholders should have equal rights of financial decision making unless one via the other is made to be clearly resolved through devastating financial effects. the conflict from here then oon arises.

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How does wealth maximization goal take care of conflict between shareholders and managers goals?

The wealth maximization goal aligns the interests of shareholders and managers by focusing on increasing the overall value of the company, which benefits both parties. When managers prioritize actions that enhance shareholder value, such as improving profitability and managing risks, they inherently address potential conflicts that arise from differing objectives. This alignment encourages managers to make decisions that foster long-term growth and stability, ultimately leading to a more harmonious relationship between the two groups. Additionally, performance-based compensation for managers can further incentivize them to act in the best interests of shareholders.


Why is shareholders' wealth maximization the main objectives of the firm?

since the shareholders are the owners of the organization and therefore seek the attainment of their objectives.that is shareholders prioritizes the increase in their invested incomes and thus employ agents who happen to be managers in order to facilitate this.maximization of the company profit increase the value of the company`s and the shareholders will be assured of a favorable dividend,thus managers must attain the objectives of their principal first otherwise the principal agent problem will arise.


Agency theory in corporate governance?

Agency theory in corporate governance is a framework that looks at the relationship between principals (shareholders) and agents (management) in a company. It seeks to understand how conflicts of interest arise between these two groups and how they can be mitigated through mechanisms such as executive compensation, board oversight, and monitoring. The theory highlights the importance of aligning the interests of managers with those of shareholders to promote accountability and maximize firm value.


In freudian terms neurotic anxiety will arise when there is conflict between the?

The id and the superego.


Why did conflict often arise between royal governors and colonial legislatures?

because they were stupid


How can conflict arise between groups in Australia?

WHen people stand over other people you get conflict, the same rule aplyes every where.


Which are the forms of conflict?

The main forms of conflict are interpersonal conflict (between individuals), intrapersonal conflict (within an individual), intragroup conflict (within a group), intergroup conflict (between different groups), and interorganizational conflict (between different organizations). Each form can arise due to various reasons such as differences in perspectives, goals, values, or resources.


Does agency cost or agency problem interfere with shareholder wealth maximization?

Yes, agency costs and the agency problem can significantly interfere with shareholder wealth maximization. These issues arise when there is a conflict of interest between shareholders (the principals) and company executives or managers (the agents), leading to decisions that may prioritize personal benefits over shareholder value. For instance, managers might pursue projects that enhance their own job security or compensation rather than those that maximize shareholder returns. This misalignment can result in inefficiencies and reduced profitability, ultimately hindering the goal of maximizing shareholder wealth.


What is the difference between Agency Theory and Stewardship Theory?

Both are about relationships between principle and agent, such as owners hiring a manager to make decisions.The agency theory believes that managers if left unattended will make decisions based on self-interest.In contrast, the stewardship theory believes that if given authority andresponsibility, the agent can act on behalf of the principle.It is a difference in perspectives, and the result is that companies give high incentives so that managers act in the interests of owners (agency theory)


Agency problems arise in sole proprietorship or partnership?

DO NOT ARISE TO PROPRIATORSHIP OR PARTNESHIP BECAUSE BOTH OF ARE OWNER OF THE ORGANIZATION THEY HAVE RESPONSIBLE FOR ANY DEBT, THERE IS NO CONFLICT BETWEEN THE MANAGEMENT AND THE OWNER.


Explain 2 reasons why conflict might occur between the objectives of these stakeholder groups?

Conflict between stakeholder groups can arise due to differing priorities and values. For instance, shareholders often prioritize short-term profits, while employees may focus on job security and workplace conditions, leading to tensions over budget allocations. Additionally, community stakeholders might advocate for environmental sustainability, which could conflict with a company's desire to maximize production and reduce costs, creating further discord among the groups.


What are agency problems and how do they come about?

Agency problems arise when there is a conflict of interest between the principals (owners or shareholders) and agents (managers or executives) of a company. These issues often stem from the agents prioritizing their own interests, such as personal financial gain or job security, over the best interests of the principals, leading to decisions that may not maximize shareholder value. This misalignment can occur due to information asymmetry, where agents possess more information about the company's operations than the principals, making it difficult for the latter to monitor agent performance effectively.