(no date‚ cited in Chin‚ Cooley and Monsen‚ 1968:435) suggest that managers self-interest lies in maximising their life-time income and that ‘such self-interest will be congruent with profit maximisation for the firm only in special cases’. This conflict between both the shareholders and the managers is termed the agency problem. Alongside the agency problem comes agency costs‚ which is the costs incurred to prevent the managers from prioritising their interests over the shareholders. It can be argued
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The Impact of Ownership Structure on the Dividend Policy of Japanese Firms with Free Cash Flow Problem Aristotelis Stouraitis Lingling Wu Department of Economics and Finance City University of Hong Kong September 16‚ 2004 * Contact information: Aristotelis Stouraitis (the author who will attend the conference and present the paper)‚ Tel: (852) 2788 8450‚ Fax: (852)2788 8806‚ Email: efstoura@cityu.edu.hk. Lingling Wu‚ Tel: (852)2788 7393‚ Email: 50004340@student.cityu.edu.hk. Address : Department
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QUESTION 2 INTRODUCTION Agency theory is a model that explicate why performance or judgment differ when display by member of a group. Specifically‚ it explains the connection between the party‚ called the principal that delegates work to another‚ called the agent. It clarify their dissimilarity in performance or judgment by noting that the two parties regularly have different goals and‚ independent of their respective goals‚ may have unusual manner toward threat. In another words‚ it can be also
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pay that is most sensitive to differences in capital structure. The results strongly support the hypothesis that firms trade-off shareholder-manager incentive alignment in order to mitigate shareholder-bondholder conflicts of interest. The hypothesis that debt reduces managershareholder conflicts can explain some but not all of the results. r 2006 Elsevier B.V. All rights reserved. JEL classification: G32; G34; J33; D82 Keywords: Executive compensation; Corporate governance; Agency problems; Capital structure
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ECGI European Corporate Governance Institute Finance Working Paper No. 39/2004 Negotiation‚ Organization and Markets Harvard University Working Paper No. 04-26 Agency Costs of Overvalued Equity Michael C. Jensen Harvard Business School; The Monitor Company; Social Science Electronic Publishing (SSEP)‚ In. This paper can be downloaded without charge from the Social Science Research Network Electronic Paper Collection at: http://ssrn.com/abstract=480421 MICHAEL C. JENSEN April 2004
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(Sec. 211): The first duty of every agent is to act within the scope of the authority conferred upon him and perform the agency work according to the directions given by the principal. When the agent acts otherwise‚ if any loss be sustained‚ he must make it good to the principal‚ and if any profit accrues‚ he must account for it. Illustrations: (a) Where the principal instructed the agent to warehouse the goods at a particular place and the agent warehoused them at a different warehouse
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DUTIES OF AGENT TO PPRINCIPAL Agent’s duty in conducting principal’s business 164. An agent is bound to conduct the business of his principal according to the directions given by the principal‚ or‚ in the absence of any such directions‚ according to the custom which prevails in doing business of the same kind at the place where the agent conducts the business. When the agent acts otherwise‚ if any loss be sustained‚ he must make it good to his principal‚ and‚ if any profit accrues‚ he must account
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definition consider relationship between company and stakeholders Agency theory A contract under which one or more person engage another person or persons to perform some service on their behalf Agency problem rise because of the conflict of interest between principle and agent Three specific problems: Managers try to maximize their wealth at the expense of shareholders Tendency for management to focus on short-term performance Different attitude of managers and shareholders towards risk Corporate
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business transactions”‚ Academy of Charnes‚ A.‚ Cooper‚ W.W. and Rhodes‚ E. (1978)‚ “Measuring the efficiency of decision-making units”‚ European Journal of Operational Research‚ Vol Chen‚ C.R. and Steiner‚ T.L. (1999)‚ “Managerial ownership and agency conflicts: a nonlinear simultaneous equation analysis of managerial ownership‚ risk taking‚ debt policy‚ and Chen‚ C.R.‚ Guo‚ W. and Mande‚ V. (2003)‚ “Managerial ownership and firm valuation: evidence from Japanese firms”‚ Pacific-Basin Finance Journal‚ Vol
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CENTRE FOR ENGLISH LANGUAGE AND FOUNDATION STUDIES Pre-sessional EAP Programme 2013 RESEARCH WRITING Final Draft Cover Page STUDENT NUMBER STUDENT NAME TUTOR NAME TITLE WORD COUNT I confirm that the material in this assignment is my own work and has not been submitted for any other course of study. I further declare that all source material used in its preparation has been acknowledged appropriately. I also confirm that I have kept a copy of this
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