The office of an agent, or factor; the relation between a principal and his agent; business of one intrusted with the concerns of another. Firm Strong and sure A firm grasp. Agency The place of business of am agent. Firm To make or become firm. Often used with up. Agency An administr...
The agency problem is a conflict of interest that occurs when agents don't fully represent the best interests of principals. Enron's demise was caused by management hiding losses from shareholders and the general public through accounting tricks. Bernie Madoff's scam is one of the most famous ...
Although some theorists disagree about whether debt holders count as principals, most definitions of agency theory acknowledge that debt holders are stakeholders whose interests are sometimes at odds with shareholders -- and therefore, agents as well. Debt holders typically want companies to repay their...
Agency costsare a type of internal cost that a principal may incur as a result of the agency problem. They include the costs of any inefficiencies that may arise from employing an agent to take on a task, along with the costs associated with managing theprincipal-agent relationshipand resolvin...
Monitoring costs incur when the principals (i.e., shareholders) attempt to ensure that the agents are acting in their best interests. These costs can take the form of direct monitoring expenses (i.e., hiring an external auditor). They can also be opportunity costs associated with the time...
Bid Price vs. Ask Price | Difference & Example Trade Capacity: Principal Trading & Agency Trading Next Lesson Types of Trading Strategies Ch 16.Investment Returns & Trade... Ch 17.Corporate Actions Ch 18.Customer Account Types &...
Therefore, agency issues may vary depending on the nature of the relationship between the agent and the principal and can fall into one of the three types of agency problems as discussed in the following sections. Stockholders vs. Management Larger companies are generally financed via equity owned...
Agency theory is a concept used to explain the important relationships between principals and their relative agent. In the most basic sense
The Fund seeks to provide a return in line with money market rates consistent with preservation of principal and liquidity by the maintenance of a portfolio of High Quality short term “money market” instruments. In pursuit of its investment objective,
There are a number of regulations and laws that define the relationship between the principal (debtholder) and the agent (management), aimed to minimize the effects of the conflict of interest. Agency Cost of Debt vs. Agency Cost of Equity ...