Chapter 10, Problem 2MC

Summary Introduction

Case summary:

Person X is decided to start a company relating to software products which integrates a wide range of media devices like laptops, desktop computers, cell phones and digital video recorders. He has selected student body at his university as an initial market.

Once his plans are successful and he will decide to expand its business to other colleges and areas and eventually to go national wide. Later he will plan to go public issue with an IPO to buy a yacht. These points are kept in mind while deciding the potential investors of his company.

To discuss: Whether agency problem exists, when person X has hired some people to help while expanding the business.