What conflicts of interest can arise between managers and stockholders?

Q: What is an agent, and what is a principal? Whatkinds of situations in companies give rise to…

A: Agent: The agent is the person authorized by the principal or business to act on behalf of them.…

Q: What is the common agency problem faced by shareholders? Describe TWO (2) situations in which…

A: When the conflicts of interest arise between any relationships then it is referred as agency…

Q: Why should shareholder wealth maximization be the overriding objective of the management?

A: We know that shareholder invest the money into the business and become the owner of the company,…

Q: Discuss how earnings management is used as a tool to reduce sensitivity to political pressure.

A: Earning management is being associated with the use of discretionary accounting accruals in order to…

Q: What do you think is the main issue of conflict between the stockholders and managers?

A: There are various conflicts of interest that can impact manager's decisions to act in shareholders'…

Q: how a firm might use stock options in order to incentivise a manager to work in the shareholders’…

A: Stock Options: These are incentives provided by the company for its employees to stay more…

Q: What are the elements of uncertainty for internal shareholders that remain or are introduced when…

A: elements of uncertainty for internal shareholders  are discussed below

Q: What is the relationship among management, auditors, investors, and creditors that tends  to…

A: Preclude the “What would you like it to be?” Attitude. Making it impossible to deviate from the…

Q: What actions that shareholders can take to ensure that management’s and shareholders’ interests are…

A: Shareholders are individuals that own shares in the company and thus has some percentage in the…

Q: In the discussion of corporate social responsibility, stakeholders and stockholders refer to the…

A: A person who owns stock in a firm is the stockholder of the firm. A conventional business's key…

Q: What are some actions that stockholders can take to ensure that management's and stockholders'…

A: In a corporation, stockholders and management are two separate bodies. Stockholders are the owners…

Q: why there is material uncertainty in the company?

A: There are several problems which are faced by the companies for both internal sources and external…

Q: _key decisions is a financial manager likely to make?

A: Answer:   _Firm Investment key decisions is a financial manager likely to make.

Q: How could overconfidence affect the financial manager of the firm and the firm’s shareholders?

A: The company have the option to issue its equity shares to the public for raising capital or…

Q: Evaluate earnings management from a utilitarian perspective. Can earnings management be an ethical…

A: Earnings management is the purposeful intervention in the external reporting purpose with the intent…

Q: What do you see as some of the possible problems if shareholder value is seen as a strategy (and not…

A: Strategy refers to the financial approach for the planning of the functions that are based on a…

Q: Importance of gatekeeper in company and financial?

A: Gatekeeper     The set of institutions, as well as actors, help to provide investors with the time…

Q: Why is it that the goal of financial management is maximization of shareholders’ wealth rather than…

A: Financial management is defined as the planning, organizing, directing, and also the controlling of…

Q: Transparency

A: Management and directors should act in a transparent manner in the affairs of the company. It is an…

Q: maximization

A: The prime objective of management accounting is the maximization of shareholders' wealth whereas…

Q: Why does business risk vary from industry to industry?

A: Business risk It is the probability of occurrence of an inadequate amount of loss because of…

Q: There is a conflict of interest between stockholders and managers. In theory, stockholders are…

A: Agency problem occurs when there is conflict of interest between the  agent (management) and the…

Q: It is an axiom that may be characterized by managers making decisions that conflict with the best…

A: Agency problem arises during the time of dissatisfaction or conflict of interest between the…

Q: Explain how a firm might use stock options in order to incentivize a manager to work in the…

A: It is a duty of a manager to work towards the interest of shareholders/origination because manager…

Q: The agency problem between shareholders and managers is the result of separation of ownership and…

A: The agency problem is a basic concepts in corporate finance that explains the conflict of interest…

Q: nature of corporate governance damages the financial stability c

A: Option "b" is wrong because compliance of corporate governance with formal laws will result in…

Q: What goals might be persued by managers instead of maximization of shareholders wealth

A: Goals of financial management should be so articulated as to help achieve the objective of wealth…

Q: Why might one expect managers to act in shareholders' interests? Give some reasons.

A: Managers would act in shareholders’ interests as a result of they need a duty to act in their…

Q: what does it mean to say that managers should maximize shareholders wealth subject to ethical…

A: Share- It is a unit of ownership in a company's capital. It entitles the shareholder to an equal…

Q: What are governance mcechanisms that help align the incentives of stockhlers and managers  - help…

A: The interest of stockholders and managers are often not aligned. Stockholders are owners of a…

Q: What key issues must managers face in the financial distress process?

A: Financial distress happens when revenues or income and no longer meet or pay for the financial…

Q: What is the implication of managerial entrenchment: should company favor debt or equity? Why?

A: Managerial entrenchment theory-says that allotment of shares inside the organization such as…

Q: What is business risk? What factors influence afirm’s business risk?

A: Introduction: Risk can be characterised in terms of the uncertainty of future consequences resulting…

Q: Why would managers misrepresent the financial results oftheir companies?

A: Fraud:   It is an intentional misappropriation of the assets or the financial records of an…

Q: What is the possible agency conflict between inside owner/managers andoutside shareholders?

A: Agency conflict: The conflict of interest of two parties one which is the principal and other which…

Q: Describe Corporate Gvernance?

A: Corporate governance is the set of rules, procedures, and processes that guide and control a firm.…

Q: How can the use of debt serve to discipline managers?

A: A debt in a capital structure is a liability for the company on which company is bound to earn as…

Q: Explain how a firm might use stock options in order to incentivise a manager to work in the…

A: Company provide incentives to managers so that they work in interest of shareholders maximization…

Q: how does the existence market for corporate control affect firm performance?

A: Market for corporate control: When the resources of the company are not utilized to its fullest…

Q: What goals might be pursued by managers instead of maximization of shareholder wealth?

A: The shareholder wealth is the company revenue. The shareholder wealth is increased by increasing of…

Q: What are the main implications of financial risk associated with the company?

A: There are various types for financial risk which are associated with the company such as: 1) Market…

Q: ____________key decisions is a financial manager likely to make?

A: Financial manager has to take many decisions related to financial management of company.

Q: What are the conflicts between shareholders and managers

A: Shareholders are real owners of company as they hold proportion of common stock in company but due…

Q: A company's financial management and stockholders might be harmed by their overconfidence.

A: Introduction: The corporation may either sell its equity shares to the public or purchase them on…

Q: activity of investor

A: A place where securities and derivatives are dealt with is known as a financial market (FM).