Which of the following assertions is true? Agency costs do not involve costs that are incurred...
Which of the following assertions is true?
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Agency costs do not involve costs that are incurred from managers pursuing their own interests at the expense of shareholder value and do not involve costs that are incurred by shareholders to make sure that managers pursue shareholder value. |
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Agency costs involve costs that are incurred from managers pursuing their own interests at the expense of shareholder value, but not costs that are incurred by shareholders to make sure that managers pursue shareholder value. |
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Agency costs do not involve costs that are incurred from managers pursuing their own interests at the expense of shareholder value, but do involve costs that are incurred by shareholders to make sure that managers pursue shareholder value. |
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Agency costs involve costs that are incurred from managers pursuing their own interests at the expense of shareholder value and costs that are incurred by shareholders to make sure that managers pursue shareholder value. |
Homework Answers
Option 4 is true
Agency costs include the costs which occur due to managers placing their personal interests above those of shareholders. For instance managers taking huge compensations even in times of falling profits.
They also include the costs which have to incurred by the shareholders to get the managers to work towards shareholder interests.
Add Answer to:
Which of the following
assertions is true?
Agency costs do not
involve costs that are incurred...
Which of the following actions will help ease agency conflicts and better align managers' objectives with...
Which of the following actions will help ease agency conflicts and better align managers' objectives with the firm's shareholder wealth? O O Pay the manager a large base salary with a huge stock option package that matures on a single date. 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. In addition to well-designed executive compensation packages, other motivational forces can align the interests...
MUST ANSWER ALL 3 for thumbs up 1. Which of the following statements is not true...
MUST ANSWER ALL 3 for thumbs up 1. Which of the following statements is not true regarding agency problems between a bank's managers and its shareholders? a. Decisions that result in growth may be intended to increase employee salaries. b. The compensation to a bank's loan officers may be tied to loan volume, which encourages the loan department to provide loans without concern about risk c. Managers are rarely tempted to make decisions that are in their own best interests...
6. Agency conflicts between managers and shareholders Consider the following scenario and determine whether an agency...
6. Agency conflicts between managers and shareholders Consider the following scenario and determine whether an agency conflict exists: Alexander and Akiko equally own and manage A New Beginning (ANB), a store that sells preowned clothing and furniture. Alexander is responsible for ANB's back-office activities, and Akiko staffs the store and makes deliveries to customers. Both have equal decision- making authority and, under the terms of their partnership agreement, both are prohibited from making personal purchases using company funds without prior...
Question 5 1 pts In a corporate (form) business entity the "agency problem" is described as...
Question 5 1 pts In a corporate (form) business entity the "agency problem" is described as the potential for conflict between two parties the principals (outside shareholders) and the company's customers O True False Question 6 2 pts . Which of the following are possible mechanisms applicable to large corporations that motivate managers to act in the best interests of the shareholders? O a. Managerial compensation (incentives) O b. Shareholder intervention c. Threat of a takeover by an outside entity...
7. Agency conflicts between managers and shareholders Aa Aa Remember, an agency relationship can degenerate into...
7. Agency conflicts between managers and shareholders Aa Aa Remember, an agency relationship can degenerate into an agency conflict when an agentacts in a manner that is not in the best interest of his or her principal. In large corporations, these conflicts most frequenty involve the enrichment of the firm's executives or managers (in the form of money and perquisites or power and prestige) at the expense of the company's shareholders. This usurping and reallocation of shareholder wealth is most...
Which statement is TRUE? O A. The Valuation Principle shows how to make the costs and benefits of a decision compar...
Which statement is TRUE? O A. The Valuation Principle shows how to make the costs and benefits of a decision comparable so that we can evaluate them properly OB. Financial decisions require that you weigh alternatives in strictly monetary terms OC. The fact that corporations' shares are easily traded within the market has a net effect of acting as a disincentive for managers to favor the interests of shareholders over their o OD. A limited liability company is essentially a...
Please answer 2. Agency conflicts between shareholders and creditors Aa Aa While the agency conflicts between...
Please answer
2. Agency conflicts between shareholders and creditors Aa Aa While the agency conflicts between managers and shareholders tend to receive the most press, they are not the only type of agency conflict affecting the modern corporation. Another equally important type of agency conflict is sometimes observed between a firm's common shareholders and its creditors, or bondholders. As with conflicts between managers and shareholders, the basis of conflicts between shareholders and bondholders is divergent concerns and motives. In general,...
Managerial Compensation is a highly controversial topic in our society today. Some believe that CEO compensation...
Managerial Compensation is a highly controversial topic in our society today. Some believe that CEO compensation is warranted while others believe that there should be a cap on the level of compensation managers can earn. After reading the section in Chapter 1 on "The Agency Problem and Control of the Corporation," please weigh in on this debate. Be sure to consider important factors such as agency problems and the concept of maximizing shareholder value. Do these views differ in reference...
The management of Demo You Inc. controls 58% of the company's stock. The firm did not...
The management of Demo You Inc. controls 58% of the company's stock. The firm did not meet any of its quarterly sales projections for the last year. Some of the firm's institutional investors are worried that the firm's poor performance is partly because management has not been focused on maximizing shareholder wealth. Which of the following measures would the institutional investors most likely want to see implemented? They would want to make sure the company's charter contains a shareholder rights...
1) According to the course materials, which one of the following goals should an ethical manager...
1) According to the course materials, which one of the following goals should an ethical manager (who adheres to all relevant laws and regulations) pursue? Maximizing firm value Maximizing firm growth Maximizing firm market share Maximizing firm profits 2) Is the following assertion true or false? Agency costs exist for many corporations, at least in part, because there is a separation between owners and managers. True False
Which of the following actions will help ease agency conflicts and better align managers' objectives with the firm's shareholder wealth? O O Pay the manager a large base salary with a huge stock option package that matures on a single date. 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. In addition to well-designed executive compensation packages, other motivational forces can align the interests...
6. Agency conflicts between managers and shareholders Consider the following scenario and determine whether an agency conflict exists: Alexander and Akiko equally own and manage A New Beginning (ANB), a store that sells preowned clothing and furniture. Alexander is responsible for ANB's back-office activities, and Akiko staffs the store and makes deliveries to customers. Both have equal decision- making authority and, under the terms of their partnership agreement, both are prohibited from making personal purchases using company funds without prior...
Question 5 1 pts In a corporate (form) business entity the "agency problem" is described as the potential for conflict between two parties the principals (outside shareholders) and the company's customers O True False Question 6 2 pts . Which of the following are possible mechanisms applicable to large corporations that motivate managers to act in the best interests of the shareholders? O a. Managerial compensation (incentives) O b. Shareholder intervention c. Threat of a takeover by an outside entity...
7. Agency conflicts between managers and shareholders Aa Aa Remember, an agency relationship can degenerate into an agency conflict when an agentacts in a manner that is not in the best interest of his or her principal. In large corporations, these conflicts most frequenty involve the enrichment of the firm's executives or managers (in the form of money and perquisites or power and prestige) at the expense of the company's shareholders. This usurping and reallocation of shareholder wealth is most...
Which statement is TRUE? O A. The Valuation Principle shows how to make the costs and benefits of a decision comparable so that we can evaluate them properly OB. Financial decisions require that you weigh alternatives in strictly monetary terms OC. The fact that corporations' shares are easily traded within the market has a net effect of acting as a disincentive for managers to favor the interests of shareholders over their o OD. A limited liability company is essentially a...
Please answer
2. Agency conflicts between shareholders and creditors Aa Aa While the agency conflicts between managers and shareholders tend to receive the most press, they are not the only type of agency conflict affecting the modern corporation. Another equally important type of agency conflict is sometimes observed between a firm's common shareholders and its creditors, or bondholders. As with conflicts between managers and shareholders, the basis of conflicts between shareholders and bondholders is divergent concerns and motives. In general,...
The management of Demo You Inc. controls 58% of the company's stock. The firm did not meet any of its quarterly sales projections for the last year. Some of the firm's institutional investors are worried that the firm's poor performance is partly because management has not been focused on maximizing shareholder wealth. Which of the following measures would the institutional investors most likely want to see implemented? They would want to make sure the company's charter contains a shareholder rights...
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