How can the use of debt serve to discipline managers?

Q: If a firm’s ROE is low and management wants to improve it, explain how using more debtmight help.

A: ROE refers to return on equity.It is a measure of profitability of a firm with respect to its…

Q: How does the financial system function?

A: Financial system function  has from starting gathering of funds This funds are used for capital…

Q: What is financial leverage and how does it affect a business's performance?

A: The company borrows money to acquire assets and do operations. The amount of debt a corporation has…

Q: Is it financial expediency for firms to borrow?

A: The acquisition of debt funds by businesses is far more convenient than any form of funds and far…

Q: Up to what extent can debt financing be useful to the company?

A: Debt financing means raising the capital for the company in the way of selling bonds, debentures,…

Q: what is financial leverage and its implications for company performance?

A: Company borrow amounts to buy assets and do business.

Q: Why Ethics matter in the financial investment industry and how to avoid ethical violence in finance

A: Introduction: The term ethics in general refers to integrity, truth, honesty, justice etc. Ethics…

Q: What is financial material abuse?

A: Financial Material Abuse - Financial material abuse refers to the abuse of  fraud , theft or making…

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: What are financial intermediaries, and what economic functions do theyperform?

A: Financial intermediaries connect the borrowers and lenders in the financial market. The financial…

Q: Why is corporate finance important to stakeholders?

A: Corporate finance generally deals with the sources of funding i.e the entity's capital structure. It…

Q: What allows financial institutions to generate a profit? What are the conditions under which their…

A: THE INTRODUCTION: The marketplaces where financial assets and instruments are traded and the sites…

Q: What can go wrong with financial leverage? Should it be used at all by a business?

A: Financial leverage refers to a term that tells us the use of money which one borrowed means the debt…

Q: What's the connection between financial intermediaries and securitization? When securitization moves…

A: This question explains about the connection between financial intermediaries and securitization

Q: financial leverage affect stockholders' control position? d) How does the tax structure influence a…

A: How does the tax structure influence a firm's willingness to finance with debt? It allows a company…

Q: How can a company expand itself out of existence, and how can this be avoided as a financial…

A: Introduction: Finance managers are accounting professionals who are concerned with the financial…

Q: What are the possible actions that a firm can take if it experiences a financial failure?

A: Financial failure of the firm could be resulted because of overspending, higher degree of illiquid…

Q: Briefly explain the over-investment problem from the perspective of the agency costs between…

A: Firms with both the debt and equity in the capital structure often face agency conflicts between…

Q: Discuss the optimal amount of debt in the presence of taxes and costs associated with financial…

A: Financial distress is a situation or a point where a firm is unable to pay its debt or firm is…

Q: Who does the Financial Markets Authority have oversight over

A: Financial Markets Authority- It is a New Zealand government's agency founded in 2011. It is set up…

Q: How can finance managers access and monitor the health and performance of a company?

A: This question explains about the finance managers access and monitor the health and performance of a…

Q: Deferring roles of financial institution play in economy

A: Financial institutions, also referred to as the banking institutions, are the corporations that…

Q: What do you mean by non quantifable factors ? (Corporate Finance)

A: Quantifiable factors in corporate finance refer to the financial numbers that defines the company’s…

Q: Why is corporate finance important to all managers?

A: Corporate finance is a part of finance which provides a clear picture on how companies make their…

Q: Explain how managerial finance function relates to Economics.

A: Managerial finance is referred as the part of finance which considers the managerial application of…

Q: What is the significance of Financial Management? What are the advantages and disadvantages of…

A: Financial management: It is the process of organizing, collecting, managing, and distributing funds…

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 are some of the pros and cons of using stockoptions to compensate managers?

A: Employee stock options: Stock options are the non-monetary incentives that are given to particular…

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: How does earnings management affect earnings quality?

A: Earnings of a company is referred as net income or bottom line item of a company. It is a very…

Q: What could possibly go wrong while using financial leverage? Do you think it should be utilized by a…

A: Financial leverage: Financial leverage is a word that describes the use of borrowed money (debt) to…

Q: Should companies preserve their financial flexibility in times of financial crises?

A: Definitions : Financial flexibility : In simple words, financial flexibility can be defined as the…

Q: Which is the quickest way to determine whether a firm has too much debt?

A: A business is supposed to be overleveraged when it is conveying an excessive amount of debt when…

Q: What is sound financial management

A: Finance is referred as the study of the assets as well as funds. It intertwined but does not same…

Q: What is one of the possible choices for financing a company’s operations and how do we account for…

A: A Company uses various short term, medium term, and long term sources of finance for its business…

Q: What are the disadvantages of the financial intermediaries and the negative ways they can impact the…

A: A financial intermediary is that entity that acts as a middleman in a financial transaction taking…

Q: How can a company expand itself out of business, and how can a finance management prevent this from…

A: There are various methods that are been used by the company in order to expand its business. A good…

Q: What is the difference between a financial crisis and a company crisis. Explain.

A: Solution                        Difference between a Financial Crisis and a Company CrisisThe…

Q: Why does the use of debt lower the profit margin and the ROA?

A: Company needs to raise the fund to have the capital which needs for the business for multiple…

Q: What is the role of financial institutions?

A: A financial institution (FI) is a firm that deals with financial and monetary activities such as…

Q: Please explain: Managers estimate bad debt expense based on​ which of the following? professional…

A: Accounting principles means those set of standards which is followed while preparing the books of…

Q: What’s the impact of risk on financial markets and institutions profitability?

A: Financial market is the place where securities like stocks and bonds along with other financial…

Q: What is the role of financial intermediaries in the financial system?

A: A set of institutions that allows the exchange and movement of financial assets and instruments from…

Q: What are the difficulties associated with the financial system and how these challenges can be…

A: Financial system is undergoing a significant change with the advancement of technology. It has…

Managing Agency Conflict

Conflict is defined as an act of disagreement between two parties caused by uncertainties between them. The conflict has a negative outcome that affects both parties involved in the argument. Conflict arises when the parties' thoughts do not align or go in opposite directions. Conflicts have negative consequences for both the individual and the business. As a result, it should be avoided.