Get premium membership and access questions with answers, video lessons as well as revision papers.
1. SHAREHOLDERS VERSUS MANAGEMENT RELATIONSHIP
In large corporations, ownership is often spread over a wide range of shareholders. By comparison, the management may compromise of only a small number of people, with a relatively small ownership in the business. In effect managers may not represent the shareholders as a whole. Therefore they may be enticed to pursue their own goals rather then that of the shareholders. In doing this a number agency costs or conflict can arise.
2. STOCKHOLDERS VERSUS CREDITORS RELATIONSHIP
Creditors have the primary claim on part of the firm's earnings in the form of interest and principal payments on the debt as well as a claim on the firm's assets in the event of bankruptcy. The stockholders, however, maintain control of the operating decisions (through the firm's managers) that affect the firm's cash flows and their corresponding risks. Creditors lend capital to the firm at rates that are based on the riskiness of the firm's existing assets and on the firm's existing capital structure of debt and equity financing, as well as on expectations concerning changes in the riskiness of these two variables.
Agency problems or conflict will arise when shareholders take actions which reduce the market value of creditors’ debts such as bonds and debentures.
3. STOCKHOLDERS VERSUS AUDITORS RELATIONSHIP
If as simple agency theory implies, principals do not trust agents to provide them with reliable and relevant information, then they will hire in external experts, who are independent of these agents. This, however, introduces the concept of auditors as agents of principals, which leads to new concerns about trust, threats to objectivity and independence.
Auditors act as agents to principals when performing an audit and this relationship therefore brings with it similar concerns with regard to trust and confidence as the director-shareholder relationship, prompting questions about who is auditing the auditor. Like directors, auditors will have their own interests and motives to consider. For example, auditors may be risk averse and being conscious of their potential liability, introduce risk management processes that result in limitations in the scope of their work and caveats in their reports which principals may find frustrating. Agency problems or conflict will arise when shareholders take actions which are not in the best interests of the shareholders.
4. STOCKHOLDERS VERSUS GOVERNMENT RELATIONSHIP
Shareholders and by extension the company they own operate within the rules and guidelines set by the government. The government in this relationship is the principal while the shareholders are the agents. The company and its shareholders as agents may take some actins that might prejudice the position or the interests of the government as the principal.
Lellah answered the question on November 8, 2021 at 06:21
- Briefly describe the relationship of finance with other fields of study.(Solved)
Briefly describe the relationship of finance with other fields of study.
Date posted: November 8, 2021. Answers (1)
- Give three roles of publicity in marketing.(Solved)
Give three roles of publicity in marketing.
Date posted: November 8, 2021. Answers (1)
- Discuss the roles and functions of the elements used in business markets.(Solved)
Discuss the roles and functions of the elements used in business markets.
Date posted: November 8, 2021. Answers (1)
- What are the elements of the communication model in marketing?(Solved)
What are the elements of the communication model in marketing?
Date posted: November 8, 2021. Answers (1)
- What are the roles of promotion in the marketing mix? (Solved)
What are the roles of promotion in the marketing mix?
Date posted: November 8, 2021. Answers (1)
- Outline the factors that affect selection of distribution channels.(Solved)
Outline the factors that affect selection of distribution channels.
Date posted: November 8, 2021. Answers (1)
- Discuss the four broad marketing channel systems.(Solved)
Discuss the four broad marketing channel systems
Date posted: November 8, 2021. Answers (1)
- Define a marketing system.(Solved)
Define a marketing system.
Date posted: November 8, 2021. Answers (1)
- Discuss the channel evaluation criteria.(Solved)
Discuss the channel evaluation criteria.
Date posted: November 8, 2021. Answers (1)
- State and explain the different types of intermediaries in marketing.(Solved)
State and explain the different types of intermediaries in marketing.
Date posted: November 8, 2021. Answers (1)
- Discuss the importance of distribution strategy in the marketing mix.(Solved)
Discuss the importance of distribution strategy in the marketing mix.
Date posted: November 8, 2021. Answers (1)
- What is a distribution channel in marketing?(Solved)
What is a distribution channel in marketing?
Date posted: November 8, 2021. Answers (1)
- What is the main responsibility of marketing oriented organization?(Solved)
What is the main responsibility of marketing oriented organization?
Date posted: November 8, 2021. Answers (1)
- Discuss the certain pricing tactics and adjustments companies use to achieve their goals.(Solved)
Discuss the certain pricing tactics and adjustments companies use to achieve their goals.
Date posted: November 8, 2021. Answers (1)
- Discuss the various types of product mix strategies. (Solved)
Discuss the various types of product mix strategies.
Date posted: November 8, 2021. Answers (1)
- State five types of product mix strategies.(Solved)
State five types of product mix strategies.
Date posted: November 8, 2021. Answers (1)
- Outline advantages and disadvantages of market-penetration pricing.(Solved)
Outline advantages and disadvantages of market-penetration pricing.
Date posted: November 8, 2021. Answers (1)
- State three conditions that must be met for market-penetration pricing to work.(Solved)
State three conditions that must be met for market-penetration pricing to work.
Date posted: November 8, 2021. Answers (1)
- Give the advantages of market skimming pricing.(Solved)
Give the advantages of market skimming pricing.
Date posted: November 5, 2021. Answers (1)
- What are the conditions under which market skimming makes sense?(Solved)
What are the conditions under which market skimming makes sense?
Date posted: November 5, 2021. Answers (1)