Fin 538

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4) What is an agency relationship? = It is the relationship between stockholders and management. Such a relationship exists whenever someone (the principal) hires another (the agent) to represent his or her interest. 5) What are agency problems and how they come about? What are agency costs? = Agency problem is the possibility of conflict of interest between the owners and management of a firm. They arise because the agent 's and the principal 's interests are not aligned. Maybe a real estate agent doesn 't get paid a commission but rather gets paid a flat fee. Then the agent just wants to make a sale rather than get the highest price for the seller. = Agency cost is a type of internal cost that arises from, or must be paid to, an…show more content…
For companies with not less than $500 million in Market Capitalization and $200 million in revenues in the most recent fiscal year, there is an adjusted net income standard which removes the effects of all items whose cash effects are investing or financing for the last three fiscal years (each year must report a positive amount), with a minimum of $25 million in aggregate. Non-U.S. Companies -- alternative listing standards To provide an alternative set of listing standards for companies organized outside the United States that meet the normal size and earnings measures for NYSE listings, the NYSE will consider the acceptability of such companies ' shares and shareholders on a worldwide basis. In view of the widespread use of "bearer" shares in other countries, in contrast to the U.S. practice of registered shares, a company would find difficulty in certifying the requirement of 5,000 round-lot shareholders on a worldwide basis. Therefore, the NYSE requires that a member firm attest to the liquidity and depth of the market for the company 's shares. These standards would apply only where a broad, liquid market for a company 's shares in the company 's home market exists. Continued Listing The appropriateness of a continued listing of a security on the NYSE cannot be measured mathematically. The NYSE may at any time suspend or delist a security where continued dealings in the security are not
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