Connect 1 Semester Access Card for Fundamentals of Corporate Finance
Connect 1 Semester Access Card for Fundamentals of Corporate Finance
11th Edition
ISBN: 9781259289392
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
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Chapter 1.4, Problem 1.4ACQ
Summary Introduction

To discuss: The term “agency relationship”.

Introduction:

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

Generally, the financial manager takes decisions according to interests of the majority. However, in larger corporations it is difficult to fulfil the wishes of the stockholders.

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