The agency problem arises when there are potential conflicts of interest between the firm owner and the lender. We show that this agency problem can constrain the firm's optimal capacity decision, because the borrowing rate will increase as the risk of default increases with capacity level chosen...
This paper develops and tests a model of an agency conflict that arises when investment management firms partition labor between portfolio managers who decide on the portfolio composition, and trading desks who implement trade decisions. The central result of our model is that in granting discretion ...
The risk arises because the same radioactive material that is beneficial could also be stolen or misplaced and find its way into trafficking rings or dirty bombs. It might also barn workers if something accidentally goes wrong during a normal nine-to-five day. In 2017 alone, according to a ...
In this case, the question arises: if the market maker, who is usually a large company, is willing to buy from you and sell to you large amounts, then is your expectation of future price change really correct?The operation of market makers is regulated by the exchange they are working ...
This agency problem-a key feature of the MBS market-arises when originators of mortgages that underlie the MBS no longer share in the prepayment risk of the securities, thereby increasing incentives to solicit refinancing activity. Therefore, Federal Reserve MBS holdings acquired from originators as ...
Although Epic may revise these Terms in its discretion, Epic does not have the right to alter the terms of arbitration or the rules specified herein with respect to any Dispute once that Dispute arises, if such change would make arbitration procedures less favorable to the claimant. Whether chan...
9.3 A `common mistake´ arises when an agreement is reached on the basis of a mistaken assumption or belief shared by both parties. This occurs, for instance, when A contracts to sell a consignment of goods to B but unknown to both parties, the goods had been destroyed by the time the...
This paper studies firm level investment under uncertainty when there are adjustment costs in changing the capital stock and agency problems in financing investment. Adjustment costs take the form of differential prices for buying and selling capital. The agency problem arises from only the entrepreneur...
By itself, that wouldn’t be a problem. The problem arises because members of each group tend to regard non-members with indifference, suspicion, or outright hostility. It doesn’t even matter if the groups are “real.” You can make up arbitrary groups and cause the same effect. As Harv...
a conflict of interest arises when someone puts their own personal gain ahead of their own duties to the corporation. One type of conflict is theagency problem, which involves