To critically think about: The agency problems in countries like Country G, Country J than in Country U. Introduction: Agency problem arises due to the likelihood of conflicts of interests between the stockholders and the management of a firm. Statement: The corporate ownership differs around the world. In Country U, the individuals have owned the majority of the share in public companies. The large financial institution, banks, and other companies own their majority of stocks in public companies in Country J and Country G. Pictorial representation:

Question

Want to see the full answer?

Answer 1

Question

Chapter 1, Problem 7CQ

Summary Introduction

To critically think about: The agency problems in countries like Country G, Country J than in Country U.

Introduction:

Agency problem arises due to the likelihood of conflicts of interests between the stockholders and the management of a firm.

Statement:

The corporate ownership differs around the world. In Country U, the individuals have owned the majority of the share in public companies. The large financial institution, banks, and other companies own their majority of stocks in public companies in Country J and Country G.

Pictorial representation:

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

What is the purpose of having a two-tier system of boards of directors in countries such as Germany? How does the dual-board approach ameliorate the potential conflicts in the principal-agent relationship between investor and manager?

Why is the agency problem more pronounced for multinational corporations? Check all that apply: MNCs are often larger than purely domestic companies. There are no international laws to prevent agency problems. Monitoring managers in foreign countries is more difficult. Managers raised in different cultures may have different goals and values.

Which of the following is a remedy for the Agency Problem in the U.S.? Shareholders have the right to elect the board of directors, which can serve as an effective check if the board remains independent of management. Shareholders have the right to overrule any managerial decisions. The U.S. government directly intervenes in company decisions to ensure shareholder interests are protected. The board of directors should always take management roles in the company.