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How does agency problem affect the relationship of financial manager with the company?
agency problem affects the financial manager relationship with the company by means of trust. if we are going to study the principal-agent relationship (principals=shareholders ; agent=managers,CEO,BOD), the agent will stand for and on behalf of the principal with the accompany of trust and confidence by the principals, but when agency problem occur where the agents are planning to pursue some objectives that are attractive to them while not beneficial for the principal the gap between the shareholders and the management team were created...
What is contained in the agency theory?
Agency theory is a theory explaining the relationship between principals, such as a shareholders, and agents, such as a company's executives. In this relationship the principal delegates or hires an agent to perform work. The theory attempts to deal with two specific problems: first, that the goals of the principal and agent are not in conflict (agency problem), and second, that the principal and agent reconcile different tolerances for risk.
What is a real estate commission rate for a home 500K?
It varies by location and is ALWAYS negotiable between the Seller/Principal and the agent representing him/her.
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.
What are the problems of agency theory to the financial manager?
The problem of agency theory are pricniple and agent.
Divorce of ownership and conrol on the principal-agent problem?
yes
What are some examples of the principal-agent problem and how does it impact the relationship between principals and agents?
The principal-agent problem occurs when a principal hires an agent to act on their behalf, but the agent may not always act in the best interest of the principal. Examples include a CEO prioritizing their own interests over shareholders, or a doctor recommending unnecessary treatments for profit. This can lead to conflicts of interest, lack of trust, and inefficiencies in the relationship between principals and agents.
Weather a principal can cancel the general power attorney with out giving notice to the agent?
A principal can certainly cancel the general power of attorney without giving notice to the agent, but if notice is not given the agent might continue to act upon the principal's behalf. If the agent does continues to act without being told he shouldn't his actions for the Principal will still be effective against the Principal and the agent will not be held to have done anything wrong. The problem is that the agent will be acting with "apparent authority", which will be just as binding on the Principal as if the POA had never been revoked.
Why is agency theory important?
Agency theory is used to understand the relationships between agents and principals. The agent represents the principal in a particular business transaction and is expected to represent the best interests of the principal without regard for self-interest. ... This leads to the principal-agent problem.
How does agency problem affect the relationship of financial manager with the company?
agency problem affects the financial manager relationship with the company by means of trust. if we are going to study the principal-agent relationship (principals=shareholders ; agent=managers,CEO,BOD), the agent will stand for and on behalf of the principal with the accompany of trust and confidence by the principals, but when agency problem occur where the agents are planning to pursue some objectives that are attractive to them while not beneficial for the principal the gap between the shareholders and the management team were created...
What has the author James M Malcomson written?
James M. Malcomson has written: 'Rank-order contracts for a principal with many agents' 'The multiperiod principal agent problem'
How do you sign as Power of Attorney?
Disclose your identity as an agent whenever you act for the principal by writing or printing the principal's name and signing your own name as "agent" in the following manner: (Principal's Name) by (Your Signature) as Agent, or (Your Signature) as Agent for (Principal's Name).
What are some effective strategies for addressing the principal-agent problem within organizations?
Some effective strategies for addressing the principal-agent problem within organizations include implementing performance-based incentives, clear communication and transparency, establishing trust and accountability, and aligning the goals of principals and agents.
What is the principal-agent problem in economics and how does it impact decision-making within organizations?
The principal-agent problem in economics refers to the conflict of interest that arises when a principal (such as a company owner or shareholder) delegates decision-making authority to an agent (such as a manager or employee) who may not always act in the best interest of the principal. This can impact decision-making within organizations as agents may prioritize their own interests over those of the principal, leading to moral hazard, shirking, or other forms of opportunistic behavior that can harm the organization's performance and overall success.
What is contained in the agency theory?
Agency theory is a theory explaining the relationship between principals, such as a shareholders, and agents, such as a company's executives. In this relationship the principal delegates or hires an agent to perform work. The theory attempts to deal with two specific problems: first, that the goals of the principal and agent are not in conflict (agency problem), and second, that the principal and agent reconcile different tolerances for risk.
What are some strategies to mitigate the principal-agent problem in a corporate setting?
Some strategies to mitigate the principal-agent problem in a corporate setting include implementing performance-based incentives, increasing transparency and communication between principals and agents, setting clear expectations and goals, and establishing monitoring and accountability mechanisms.
What is the principal-agent problem?
In politics, the principle is the citizen, who poses the right to make certain decisions. The agent is members of Congress. The problem is when the principle and agent have different goals, causing conflict to arise. One might feel their Congressman is "out of touch" or not getting things done.
