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

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: 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: why is the difference between a stock's current market price and its intrinsic value important to a…

A: Stock's current market price: The current stock price of a company is a price that an investor is…

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 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: Can the goal of maximizing the value of the stock conflict with other goals, such as avoiding…

A: In corporation the maximize the value of shareholders wealth is basic objectives of management of…

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: Elaborate two (2) approaches on how to tackle issue on the conflict of interest  between management…

A: Shareholders are the owners, they invest the amount in the company which the company utilizes fin…

Q: Which among the following statements is INCORRECT regarding agency costs? a. The reason for agency…

A: Agency problems exist when there is a conflict of interest between the management and the…

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: How does the use of financial leverage affect current stockholders’control position?

A: Financial leverage refers to the extent of debt in the capital structure. A highly leveraged firm is…

Q: 2 (a)There is a conflict of interest between stockholders and managers. In theory, stockholders are…

A: Shareholders are the people who invest money in the business for the purpose of earning returns.…

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: conflicts that can arise when a company is owned by group of shareholders but managed by a different…

A: The shareholders are owners of the business. As per agency theory, the management act as agents on…

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: 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: What is the possible agency conflict between inside owner/managers and outside shareholders? What…

A: What is the possible agency conflict between inside owner/managers and outside shareholders?…

Q: Is maximizing shareholder value inconsistent with being socially responsible?Explain.

A: Maximizing the shareholder's value is the highest goal for any organization as they are the owners…

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

A: Some actions that stockholders can take to guarantee that interests of stockholders and management…

Q: Write down what are the disadvantages of shareholders equity?

A: Equity is one of the common sources to raise finance. Whenever a company requires finance it can…

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: "Financial manager

A: Financial managers are the person who is responsible for the financial health of the company and…

Q: Which of the following statements is/are INCORRECT? O 1) Takeover threats tends to affect managerial…

A: Corporations have double taxation problems: The given statement is true as the income id once…

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: How does the use of financial leverage affect stockholders’ control position?

A: SOLUTION:- By raising capital through debt, the owners maintain control of the firm with limited…

Q: How are conflicts between the shareholders and the management created? Which of the following is…

A: Management group might be more ready to take on more significant levels of chance, while…

Q: Explain how management accounting should not fit the straitjacket of financial accounting.

A: Definition: Management accounting is concerned with the financial and non-financial data that help…

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

A: Shareholders own the company but they don’t manage it. Hence, they elect Board of Directors…

Q: Managers often complain that the stock market is short-sighted and focused on accounting earnings.…

A: Stock market is short-sighted and focused on accounting earnings.- This is definitely not the…

Q: What business risks does Toll Brothers face that may threaten the company’s ability tosatisfy…

A: The Toll brother’s faces numerous business risks that are described in the annual report. Apart from…

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: 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: In what situations should managers consider the use of stock splits?

A: stock splits: It is the situation of increasing the number of shares by dividing one share into tow…

Q: Agency costs are best defined as: The cost of conflict between the banks and shareholders O The cost…

A: Agency costs are the internal costs which arise due to the conflict of interest between firm's…

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: Explain the links between stock price, intrinsic value, and executive compensation

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…

Q: Which of the following statements is/are INCORRECT? O 1) Takeover threats tends to affect managerial…

A: Bondholders: These are the investors that invest in a company by purchasing the bonds issued by that…

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.