Purchase Solution

Shareholders and the Agency Problem

Not what you're looking for?

Ask Custom Question

How does the agency problem often interfere with the ability of the shareholders to achieve their goals? Are the managers simply "getting in the way" of achieving shareholder goals?

Purchase this Solution
Solution Summary

This solution outlines the agency problem and highlights how this can cause a conflict of interests between managers and shareholders.

Solution Preview

How does the agency problem often interfere with the ability of the shareholders to achieve their goals? Are the managers simply "getting in the way" of achieving shareholder goals?

Agency is the relationship between the principal and the agent. The agent has the fiduciary responsibility for the principal. But there can be conflict between ...

Purchase this Solution
Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

View More Free Quizzes
Related BrainMass Solutions

  • Eliminating Agency Problems

    Your friend, aware of your expertise in the field of finance, asks you if the CEO's actions are creating an agency problem, and if so, asks about options that are available to the shareholders to resolve this problem.

  • Potential Problems with an Agency Relationship

    In financial theory we call this "the agency problem" and have an extensive body of literature and research on the topic.

  • Agency conflict

    Therefore the agency problem is the conflict of interest arising between creditors, shareholders and management because of having different goals.

  • What is meant by the term "agency problem"?

    This solution explains the agency problem and discusses terms with examples from the perspective of a CEO and the shareholders of a company. This solution is 127 words.

  • What are some areas of conflict between shareholders and management and how can they be resolved?

    Shareholders and managers have the principal-agent relationship. In practice, there may arise a conflict between the interests of shareholders and managers. This is referred to the agency problem and the associated costs are called agency costs.

  • Agency problem and Sarbanes-Oxley Act

    394558 Agency problem How does the agency problem affect accountants? How has SOX changed the situation? Agency problem refers to the conflict of interest that might occur between shareholders, creditors, and the management of the company.

  • Agency problem and agency cost

    In addition to agency conflicts between owners (shareholders) and managers of a corporation, agency conflicts can arise between owners (shareholders) and creditors of the corporation, and between managers and employees of the corporation.

  • What is Agency Theory?

    Often, we talk about an "agency problem" when the interests of employees are not the same as the shareholders. For example, executives paying themselves inflated salaries and large bonuses, while their company fails and the stock price plummets.

  • Sports Products, Inc for Management

    The management is in a fiduciary position and is responsible for enhancing the interests of the shareholders. Step 2 The firm appears to have an agency problem.

View More Related Solutions