All categories

2 years ago

Agency conflicts between managers and shareholders

Business

1 answer:

ollegr [7]2 years ago

6 0

Answer:

1. Yes; William is misappropriating some of Abigail’s wealth by unilaterally purchasing a nonbusiness asset using ANB’s funds.

William is enriching himself at the expense of Abigail so indeed an Agency conflict exists.

2. No; although an agency relationship exists between TGZ’s management—including Caesar as TGZ’s chairman and CEO and the firm’s shareholders—there is no agency conflict, because no expropriation or wasting of the shareholders’ wealth has occurred.

An agency conflict arises only when the agent begins to act in a way that is not in the best interest of their principal and enriches themselves at the expense of their principal. This has not happened here so there is no agency conflict.

3. Pay the manager a combination of salary and stock options (phased in over several years) that reward him or her for consistently increasing shareholder wealth.

This way the manager will have an incentive to keep working for the benefit of the shareholders overtime because it would make them well off as well.

4. MORE LIKELY

When Institutional ownership is available like Pensions and Mutual funds, they will be able to put more pressure on management as they will typically own a larger share of shares while at the same time having the expertise required to influence management.

5. INCREASED CONFLICT.

One incentive that can be used to keep management in check is the risk of Hostile Takeovers and the new management can decide to fire the management for poor performance or selfish behavior. If Congress reduces the chances of hostile takeovers, management will be more likely to engage in agency conflicts.

You might be interested in

1. Estratégia é o caminho para ir de um ponto a outro, obedecendo a restrições e respeitando determinado prazo. Para se definir

NeX [460]

Answer:

Olá, realizei algumas pesquisas e encontrei a opção que você precisava.

d. Não definir forças, oportunidades, fraquezas e ameaças, as quais a empresa está inserida.

Explanation:

A estratégia organizacional é definida de acordo com as metas e objetivos que a empresa deseja alcançar no curto e longo prazo.

Por isso é necessário implementar planos que auxiliem a empresa na obtenção dos resultados esperados.

A análise SWOT é uma ferramenta de gestão estratégica utilizada para que uma organização tenha conhecimento das variáveis internas (forças e fraquezas) e externas (oportunidades e ameaças) que influenciam no seu desempenho e consequentemente nos resultados.

Portanto a alternativa D é falsa, visto que a análise das forças, oportunidades, fraquezas e ameaças organizacionais, irão orientar a empresa a identificar os seus pontos positivos e negativos de forma a coordenar, corrigir e controlar seus ambientes para que se alcance maior eficácia organizacional.

5 0

2 years ago

Credit in developing countries can be granted through formal or informal channels. Formal channels include institutions such as

joja [24]

Answer:

Yes they can be used to purchase goods or invest in a business.

Explanation:

Loans from formal channels like banks and government agencies are usually given for an specific purpose if you own a business or can be handed out for any type of personal use if you request them as an individual. This applies to developed and developing countries.

Loans from informal channels can also be used by a business, specially small businesses, and obviously personal use. Large businesses will probably not take a loan from an informal channel since the interest rates will probably be higher and the amounts will be too small. But even on developed countries, someone who has just graduated can ask his/her parents or a friend for a loan to start a small business or buy a car. Informal channels are based on personal relationships and even though they don't represent a large percentage of loans in developed countries, they also exist.

4 0

2 years ago

Q 11.26: The board of directors of Testa Incorporated has decided that they would like to declare a $400,000 cash dividend at so

11Alexandr11 [23.1K]

Answer: B. : a healthy cash reserve

Explanation:

For the company to be able to declare a Dividend, it's cash reserve needs to be healthy. For this to happen use the following formula;

Free cash balance = Available cash balance - Current Liabilities payable

= 827,000 - 436,000

= $391,000

After taking out the money that will be needed to pay the Current Liabilities, there would be an insufficient balance to pay off the Dividends of $400,000.

Their cash reserve is not healthy enough for the dividends to be declared.

6 0

2 years ago

Like a good economist, you calculated the opportunity cost of getting your college degree. Suppose that at your university, you

Georgia [21]

Answer:

The opportunity cost is $130,000 for the four year duration.

Explanation:

Here, it is clear that I will not go to the job, so going to university is the only option left. Now, the loss of the job income is also an opportunity cost with an amount $20,000 which will aggregated with the University specific costs.

University Specific cost for 4 Years = 4 * (Tuition Cost + Textbooks + Job Opportunity loss)

The room and board cost is common between college and the university so it must not be considered for the decision making.

By putting values, we have:

University Specific cost for 4 Years = 4 * ($10,000 + $2,500 + $20,000)

University Specific cost for 4 Years = $130,000 for the four years

The opportunity cost is $130,000 for the four year duration.

For better understanding of relevant costing (Opportunity cost analysis), consider the following question:

brainly.com/question/14423321

3 0

2 years ago

To what extent do cost recovery deductions based on the capitalized cost of a tangible asset reflect a decline in the economic v

sladkih [1.3K]

Answer:

Cost recovery deductions do not have relationship to any decline in value of the property to which the deduction relates.

Explanation:

Capitalised costs are the cost that is incurred when building and financing a fixed asset. For example labour cost in building and financing an asset.

These expenses are added to the cost of the asset (capitalised) and taken gradually over time through depreciation, depletion, and amortization. They are not taken out of revenue in the period when they were incurred.

So cost deductions through capitalised cost is not related to the value of the asset but is an expense that is incurred in relation to the asset, and it's payment is spread out over time.

For example if $1,200 is incurred on construction of an asset worth $500,000. If $1,200 is capitalised over 12 months $100 will be deducted each month from expense. This does not affect the value of the asset ($500,000).

7 0

2 years ago