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  • 1 Unit Agency Problems

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    rafishaik786
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    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
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    4 views8 pages

    1 Unit Agency Problems

    Uploaded by

    rafishaik786

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 8

    AGENCY PROBLEM

    • Shareholder (principal)
    • Manager (agent)

    • Clash of goals
    • Connecting pay to the profit earned.
    • Rewarding managers with shares.
    • Direct intervention by owners
    • Thereat of firing
    • Threat of takeover.
    DEVELOPING CASH FLOWS
    • CASH FLOWS

    • ELEMENTS OF CASH FLOW


    • Initial investment
    • Operating cash flows/net cash flows.
    • Terminal cash flows
    FINANCIAL MANAGEMENT

    MAXIMISATION OF SHARE VALUE

    FINANCIAL DECISIONS

    INVESTMENT LIQUIDITY FINANCING DIVIDEND


    DECISION DECISION DECISION DECISION

    TRADE-OFF
    RETURN RISK

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