ESSENTIALS CORPORATE FINANCE + CNCT A.
ESSENTIALS CORPORATE FINANCE + CNCT A.
9th Edition
ISBN: 9781259968723
Author: Ross
Publisher: MCG CUSTOM
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Chapter 1.5, Problem 1.5ACQ
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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