escribe some mechanisms that are used to solve the stockholder/bondholder agency conflict and the stockholder/manager conflict. How effective are each of these methods in accomplishing their goal?
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Describe some mechanisms that are used to solve the stockholder/bondholder agency conflict and the stockholder/manager conflict. How effective are each of these methods in accomplishing their goal? Why?
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- Explain the role of agency conflicts between managers, shareholders, and bondholders in corporate payout policy.What is the common agency problem faced by shareholders? Describe TWO (2)situations in which stockholders can ensure that management’s and stockholders’interests are aligned?Which of the following actions would be most likely to reduce potential conflicts of interest between stockholders and bondholders? a. Compensating managers with stock options. b. Abolishing the Security and Exchange Commission. c. The use of covenants in bond agreements that limit the firm's use of additional debt and constrain managers' actions. d. Financing risky projects with additional debt. e. The threat of hostile takeovers.
- Which of the following is not an advantage of going public? a. Access to capital. b. Compliance. c. Use of stock options. d. Liquidity for owners’ investmentsFill in the table below where you define and explain the differences between each of the following terms: stakeholders, stockholders, shareholders, equityholders, bondholders, debtholders. Terms Definition / Explanation Stakeholders Stockholders Shareholders Equity holders Bondholders DebtholdersFill in the table below where you define and explain the differences between each of the following terms: stakeholders, stockholders, shareholders, equityholders, bondholders, debtholders. Terms Definition / Explanation Stakeholders Stockholders Shareholders Equityholders Bondholders Debtholders
- How can bondholders protect themselves from managers’ actions that negativelyimpact bondholders?What are the major internal controls over owners’ equity?Which of the following statements is CORRECT? Select one: a. Conflict of interest between shareholders and managers is not possible. b. By definition, the agency problem can only take place in corporations but not in proprietorships and partnerships. c. Conflict of interest between shareholders and bondholders is not possible. d. Managers always work to maximize the long-run value, and therefore the price, of their company stocks. This is exactly what shareholders desire.