Question

True or False: A small number of institutional investors are often able and motivated to bring direct shareholder pressure on a firm's management in an effort to reduce potential agency conflicts. True False

Answer 1

Q) A small number of institutional investors are often able and motivated to bring direct shareholder's pressure on firm's management in an effort to reduce potential agency conflicts.

Answer- The statement is True. This is due to the  Institutional investors for insurance companies, pension fund companies have institutional lenders where the  institutional investors are mainly the primary lenders to the firm and they have more say in the company to bring direct shareholder's pressure on firm's management in order to reduce the potential agency conflicts.

The term book value has several uses. It can refer to a single asset or the company as a whole. When referring to the individual asset, such as a piece of equipment, book value refers to the assets historical value or original purchase price adjusted for any accumulated depreciation or amortization expense. The net value or the difference between these two values is called the asset's book value.

In contrast when the term refers to the entire company it means the total value of the company's total assets as reported in the firms balance sheet.

That makes sense. So what makes this value important to investors is that it is an expected future value that can change - but only due to couple of events including the sale of treasury stock, the sale of new common and preferred shares , and the payment of dividends . Equally important it will not change in response to changes in the market prices of the firms shares