Explore BrainMass

Explore BrainMass

    Analyze the concept of Principle-Agency Problem

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    The concepts are:

    -Asset Price Bubble
    -Bank Panic
    -Principle-Agent Problem
    -Moral Hazard
    -Adverse Selection
    -Conflict of Interest

    Have to select one of these concepts and find a related article at (The Global Financial Times) http://www.ft.com/home/us

    You will find one (or several articles) to analyze. Remember to focus upon your selected concept in your analysis. Make sure you add the reference of the article from The Global Financial Times in the article.


    © BrainMass Inc. brainmass.com March 4, 2021, 11:47 pm ad1c9bdddf

    Solution Preview

    Principle Agent Problem:

    The principle agent problem which results mainly because of conflict of interest between the agents and principle, as to whether the agent should act in the best interest of the principle or should he/she pursue their own interests at the expense of the principle's, has been one of the major blames put on the recent financial crisis, and with the crisis several policies and regulations are underway to regulate the power of management and executive officers in various corporations. This paper analyses Jamie Whyte's view on the principle agent problem.

    Jamie Whyte in his "Why regulating bankers' pay is still a bad idea" hypothesizes that bankers and management's pay need not be regulated as these would not be a solution to the principle agent problem (Whyte, 2008). This stipulation is fractionally right in the sense that regulations would stifle incentives and this would be detrimental to shareholders in the long run as the management would not be motivated enough to increase company value. The fact that the crisis which originated from the sup prime mortgage crisis was mainly as a result of most managers irresponsibly pursuing to ...

    Solution Summary

    The expert analyzes the concepts of principle-agency problems are examined.