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Principal-agent problems arise when there's a conflict of interest between a principal (e.g., shareholders) and an agent (e.g., management) tasked with acting on the principal's behalf. Key causes include differing objectives, where the agent may prioritize personal goals over the principal's interests, and information asymmetry, where the agent possesses more information about the situation than the principal. This misalignment can lead to inefficiencies and suboptimal decision-making. Additionally, lack of proper incentives or monitoring mechanisms can exacerbate these issues.
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How do Financial Management resolve agency problems?
first a fall agent should act according to principle. he have to follow principle and try to avoid his own mater.
What is the difference between franchise and agency?
Agency : principle is liable for the act of agent and agent get fees or commission from the principle. Franchise : Principle is not liable for the act of agent and PRINCIPAL get fees of commission form the agent.
What is agency representation?
The term agency in law, means representation. An agent represents you (the principle) and is authorized to enter into legal relationships on your behalf or the business. Agency representation means that someone else is representing the principle.
Example case of agency by ratification?
an agent secures a contract on behalf of the principle and the principle agrees to it
According to the agency problem what represents the principle of a corporation?
Shareholders
What govt agency was created to avoid future problems in the stock market?
Obama's agency
What are the problems of agency theory to the financial manager?
The problem of agency theory are pricniple and agent.
What are agency problems and why do they exist within a corporation?
thavin
What are the agency problems between shareholders and management?
faak it
What are the Problems encountered in a travel agency?
Off-season closures?
How do the rotors on a windmill and the sail of a sailboat illustrate the same principle?
The principle of lift is well-illustrated by the motion it causes.
What causes of problems including the unfair trading system?
What are the causes of the problems including the unfair trading ystem?
