An agency relationship is defined as a person (the principal) appoints another person (the agent) to act on its behalf, which is also known as the principal-agent relationship. Once there is a conflict of interest between the needs of the principal and the needs of the agent, we call it as an agency problem. The most well known agency problem in modern corporate firms is the conflicts between shareholders and managers. However, the agency problem also exists between shareholders and debt holders. This paper is intended to evaluate the agency problems between shareholders and managers, as well as shareholders and debt holders. The following paper is specified into four sections to evaluate the agency problem. Section I and II mainly focus on …show more content…
However, if the project is negative, both the shareholders and debt holders have to share the cost of failure. In another word, shareholders are trying to maximize their personal wealth at the expense of debt holders. Therefore, debt holders are more likely to choose the project which can increase the probability of getting their investment back. The second conflict between shareholders and debt holders is the amount of dividend to pay out. For shareholders, a high dividend is desired as the shareholders’ wealth can be directly maximized with this high dividend. However, debt holders do not like the firm paying a high dividend to shareholders. Because high dividend payment may lead to the reduction in the company’s cash flow, which may finally destroy debt holders’ wealth. Section III: Control of agency conflicts. The agency conflicts not only indicate the diverse objectives in running the company between the principal and the agent but also may
...disclosing positive signal to the investor. In this case, the profitability, turnover and return to the investors are less and this is the industrial trend. In this situation, an investor has to look into the liquidity ratio and into the debt ratio. When the profit earning capacity of the company is lesser in the industry, those company should not prefer to have higher debt as this will drain their entire liquidity and will add more pressure to the company. This will increase the chances of bankruptcy and financial distress costs too. In this regard Exxon has very poor liquidity and higher debt which is adding more risk on investment. In this case, Chevron will be preferred over Exxon because, Chevron provides for similar return to investors but at lower risk, where as risk is higher in Exxon with lower return. Thus, Exxon should not be chosen for making investment.
“Agency relationships are formed by the mutual consent of a principal and an agent.” (Cheeseman, p.487) Our book goes on to cite the Restatement (Second) of Agency,
Throughout the second half of this semester, dual relationships have been emphasized as one of the most frequently encountered ethical dilemmas faced by behavior analysts in the field today. According to the class lectures, assigned text, and other articles that we have read, this is due to the fact that we interact with our clients and those caring for them in their natural settings. As a result, those we provide services to, and interact with, are in the places in which they feel the most comfortable, their homes or regular classrooms. This is in stark contrast to a formal office setting, which projects an atmosphere with both expected standards of acceptable behavior, and clear boundaries between client and the service provider. In an effort
Substance disorders affects all social, educational, cultural, and age groups. Substance abuse research often focusses on the abuser and the family as a whole but not how it affects their spouse. United States misuse is linked to approximately 590,000 deaths and is responsible for injury or illness to almost 40 million individuals every year. (Cox, R., Ketner, J. & Blow, A. 2013). The consequences resulted from this disorder, are not only related to the substance abusers, but also have a great influence on their behavior and other layers of their life, especially their wives (Salehyan, Bigdeli, & Hashemian 2011). When the husband or boyfriend has an addiction the wife takes on responsibilities of her spouse which causes an increase in stress. Marriage is generally described as a protective factor against substance use. The concept of codependency was developed to explain what happens to the spouse of a substance abuser.
A team is a group of individuals, all working together for a common purpose. The individuals comprising a team ideally should have common goals, common objectives and more or less think on the same lines. Individuals who are not compatible with each other can never form a team. They should have similar if not the same interests, thought processes, attitude, perception and likings.
“We are made wise not by the recollection of our past, but by the responsibility for our future.” Responsibility is a big part I am at college and have a job here today which a reason for everyone but for me that didn’t sit in till freshman year of high school I was care free until football. What I had to do was to work together on the field also in the classroom or I would let the team down. Our coach always told us there is teamwork, hard work, and respectful will follow us around for the rest of your life that’s what we are going to learn. I would have to say looking back on it I definitely learn those things from what I did make a better person I would have to thank him for that too.
There were separate management structures maintained in the group with the CEO of NOL in Singapore and CEO in the United States reporting to the group CEO. This separation between owners and manager creates an agency relationship. This exist when one or more persons (the principal or principals) hire another person or persons) as decision making specialist to perform a service. In the modern corporation, managers must understand the links between
In life we have different types of personal relationship that were we communicate differently in order to fit their need. Such as people with low self-esteem, or just people who are going through some hardships in their lives. Communications is the way to get through to them.
An agency relationship is formed between two parties when one party (the agent) agrees to represent another party (the principal). Normally, all employees who deal with third parties are considered agents. Principal-Agent relationships are defined as the understanding that the agent will act for and on behalf of the principal. (Cheeseman) The agent assumes an obligation of loyalty to the principal that he will follow the principal’s instructions and will neither intentionally nor negligently act improperly in the performance of the act. An agent cannot take personal advantage of the business opportunities the agency position uncovers. A principal-agent relationship is fiduciary, meaning these obligations bring forth a fiduciary relationship of trust and confidence. As such, an agency relationship is governed by employment law.
Before a partnership formation is imminent, the business needs to decide on which type of partnership to form. There are three types of partnerships: (1) general partnerships, (2) limited partnerships, and (3) joint ventures. All three partnerships contain two or more owners, but all partners assume equal division of ownership, liabilities, and profits in a general partnership. Limited partnerships offer limited liability protection based on each partner’s contribution percentage. Joint ventures are classified as general partnerships with limited existence periods. Once a type of partnership has been determined, the business fulfills a series of requirements before the partnership can be successfully formed. The first step is to register
Describe and explain how this factor can potentially have a positive influence on workplace relationships
As we start to grow, we begin to build relationships that can be temporary or last a lifetime. These relationships help us learn more about ourselves and also about others. We learn how to build friendships and relationships from a young age, and we learn to cherish the people who stay for the long run. Then again, we also learn about the emptiness that is felt once someone dearly decides to no longer be in your life. With this being said I will be writing about my interpersonal relationship that I have with my boyfriend Jorge. Not only about our history and how we communicate, but as well as how we overcome conflict and the power that we each hold.
Throughout most of my life I have gained friendships and relationships with others that have turned into long term, but others which only lasted a short while. The friendship that has greatly impacted my life significantly over the last eight years is someone who means so much to me. This meaningful friendship all started back when I was in middle school, which has grown stronger over the years. I met Brooke in middle school because we had some of the same classes and were in homeroom together. Our friendship developed quickly and lasted throughout our high school years. We became really close our Junior and Senior year of high school. But, maintaining our friendship hasn’t always been so easy. Today, we text and call each other on our free time, but I know I can count and rely on her when I need someone to talk too. I call her my second sister and vice versa. And when we go home on breaks we see one another as much as we can. The best part of our relationship is that if one is in need of advice or in need of a shoulder to cry on, we are always there for one another. Keeping in contact is very important in our relationship and communication has played a key role in our relationship.
The Auditor-Firm Conflict of Interests: Its Implications for Independence: A Reply. By: Goldman, Arieh; Barlev, Benzion. Accounting Review, Oct75, Vol. 50 Issue 4, p857-859, 3p
Relationships are intricately complex. Made up of several interactions that are full of verbal and non-verbal communication, a relationship between any two people is completely and utterly unique. There are so many dynamics that are at play in relationships and several opportunities for both good and bad communication. In my life, I have experienced all kinds of people and relationships: friends, acquaintances, brothers, parents, teammates, lab-partners, peers, teachers, mentors. The list goes on and on. Three examples of my personal relationships are my relationship with my brother Caleb, my friend Kennedy, and my high school teacher Mrs. Antwine. In all three relationships, we communicate verbally and non-verbally. However, because of different circumstances, atmospheres, and backgrounds, each relationship differs from the others.