Agency theory – NBC Institute

FM – Nov 2018 – L3 – Q7 – Corporate Governance and Financial Strategy

Analyze potential agency conflicts between company owners and managers and methods to mitigate these issues.

Question

Agency theory was developed by Jenson & Meckling (1976), defining the agency relationship as a form of contract between a company’s owners and its managers, where owners appoint agents (managers) to manage the company on their behalf. As part of this arrangement, owners delegate decision-making authority to management. In this relationship, owners expect agents to act in their best interest.

Required:

a. Agency conflicts may arise in various ways. Discuss four of these conflicts. (9 Marks)

b. State four methods by which problems arising from these conflicts could be reduced. (6 Marks)

Answer

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Tags: Agency theory, Corporate Governance, Managerial Actions, Mitigation Strategies, Principal-Agent Conflict, Shareholder Interests
Level: Level 3

Topic: Corporate Governance and Financial Strategy

CSME – Nov 2020 – L2 – Q3 – Corporate Governance

Discuss five theories of corporate governance to assist a newly appointed director.

Question

Effective corporate governance requires adequate understanding of the basic concepts and theories of corporate governance.

Required:
Discuss five theories of corporate governance in a way that will assist a newly appointed director to understand and apply them.

Answer

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Tags: Agency theory, Corporate Governance, Stakeholder Theory, Stewardship Theory, Theories
Level: Level 2

Topic: Corporate Governance
Series: NOV 2020

SCS – Dec 2022 – L3 – Q3 – Strategy, stakeholders, and mission

Explanation of potential agency conflicts minimised by the involvement of a shareholder in management.

Question

Mr. Asare Blankson, the sole shareholder, has been actively involved in the management of the company by serving as the CEO for many years and currently as the Board Chairman. This could minimise potential agency conflicts associated with the separation of the shareholder(s) from management as suggested by the Agency Theory of Corporate Governance.

Required:

Explain FIVE (5) potential agency conflicts that could be minimised or avoided by Mr. Asare Blankson’s involvement in the management of the company as a former CEO and the current Board Chairman. (10 marks)

Answer

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Tags: Agency Conflicts, Agency theory, Corporate Governance, shareholder-management relations
Level: Level 3

Topic: Strategy, stakeholders, and mission
Series: DEC 2022

BMF – Nov 2021 – L1 – SA – Q17 – The Role of Professional Accountants in Business and Society

Question on who developed agency theory in 1976.

Question

Agency theory was developed in 1976 by:

A. Fayol and Mayo
B. Kanter and Urwick
C. Jensen and Meckling
D. Mintzberg and Ouchi
E. Frank and Lillian Gilbreth

Answer

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Tags: Agency theory, Corporate Governance, Management
Level: Level 1

Topic: The Role of Professional Accountants in Business and Society
Series: NOV 2021

BMF – Mar July 2020 – L1 – SA – Q14 – Basics of Business Finance and Financial Markets

Identifying the developers of Agency Theory.

Question

Agency Theory was developed in 1976 by
A. Fayol and Mayo
B. Kanter and Urwick
C. Jensen and Meckling
D. Mintzberg and Ouchi
E. Frank and Lillian Gilbreth

Answer

Find Related Questions by Tags, levels, etc.

Tags: Agency theory, Corporate Governance, Management Theories
Level: Level 1

Topic: Basics of Business Finance and Financial Markets
Series: MAR/JULY 2020

FM – July 2023 – L2 – Q1 – Economic and regulatory environment | Sources of finance: debt

Discuss the conflicts between management and shareholders, costs associated with appointing management, and calculate the yield and cost of different debt financing options for Gologo Ghana Ltd.

Question

a) Shareholders of a large company substantially delegate the management of their business to agents (managers). Decision-making authority is also delegated to management. In a perfect condition, Management is expected to give priority to the interest of shareholders rather than their personal interest.

Required:
i) In reference to the above, explain THREE (3) areas of conflict between Management and Shareholders. (6 marks)
ii) Explain TWO (2) aspects of cost to shareholders in appointing an agent (Management). (4 marks)

b) Gologo Ghana Ltd is making a choice between issuing a public bond and placing the debt privately for GH¢600 million.

The public offer will be in GH¢100,000 denominations and carry a coupon or interest payment of 25% per annum. The bond will, however, sell for GH¢96,000 each. The issuing and underwriting cost will be 5% of the market value and is tax deductible.

The private placement will attract an interest rate of 26% per annum, and the company will receive the full face value of the loan. In both cases, the debt will be repaid after 20 years. The tax rate for the company is 30%.

Required:
i) Calculate the annual yield (%) the buyers of the public bond will earn. (3 marks)
ii) Compute the cost of both the bond and the private debt. (7 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Agency theory, Bond issuance, Cost of Debt, Private placement
Level: Level 2

Topic: Economic and regulatory environment, Sources of finance: debt
Series: JULY 2023

FM – Nov 2018 – L3 – Q7 – Corporate Governance and Financial Strategy

Analyze potential agency conflicts between company owners and managers and methods to mitigate these issues.

Question

Required:

a. Agency conflicts may arise in various ways. Discuss four of these conflicts. (9 Marks)

b. State four methods by which problems arising from these conflicts could be reduced. (6 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Agency theory, Corporate Governance, Managerial Actions, Mitigation Strategies, Principal-Agent Conflict, Shareholder Interests
Level: Level 3

Topic: Corporate Governance and Financial Strategy

CSME – Nov 2020 – L2 – Q3 – Corporate Governance

Discuss five theories of corporate governance to assist a newly appointed director.

Question

Effective corporate governance requires adequate understanding of the basic concepts and theories of corporate governance.

Required:
Discuss five theories of corporate governance in a way that will assist a newly appointed director to understand and apply them.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Agency theory, Corporate Governance, Stakeholder Theory, Stewardship Theory, Theories
Level: Level 2

Topic: Corporate Governance
Series: NOV 2020

SCS – Dec 2022 – L3 – Q3 – Strategy, stakeholders, and mission

Explanation of potential agency conflicts minimised by the involvement of a shareholder in management.

Question

Required:

Answer

Find Related Questions by Tags, levels, etc.

Tags: Agency Conflicts, Agency theory, Corporate Governance, shareholder-management relations
Level: Level 3

Topic: Strategy, stakeholders, and mission
Series: DEC 2022

BMF – Nov 2021 – L1 – SA – Q17 – The Role of Professional Accountants in Business and Society

Question on who developed agency theory in 1976.

Question

Agency theory was developed in 1976 by:

A. Fayol and Mayo
B. Kanter and Urwick
C. Jensen and Meckling
D. Mintzberg and Ouchi
E. Frank and Lillian Gilbreth

Answer

Find Related Questions by Tags, levels, etc.

Tags: Agency theory, Corporate Governance, Management
Level: Level 1

Topic: The Role of Professional Accountants in Business and Society
Series: NOV 2021

BMF – Mar July 2020 – L1 – SA – Q14 – Basics of Business Finance and Financial Markets

Identifying the developers of Agency Theory.

Question

Agency Theory was developed in 1976 by
A. Fayol and Mayo
B. Kanter and Urwick
C. Jensen and Meckling
D. Mintzberg and Ouchi
E. Frank and Lillian Gilbreth

Answer

Find Related Questions by Tags, levels, etc.

Tags: Agency theory, Corporate Governance, Management Theories
Level: Level 1

Topic: Basics of Business Finance and Financial Markets
Series: MAR/JULY 2020

FM – July 2023 – L2 – Q1 – Economic and regulatory environment | Sources of finance: debt

Discuss the conflicts between management and shareholders, costs associated with appointing management, and calculate the yield and cost of different debt financing options for Gologo Ghana Ltd.

Question

b) Gologo Ghana Ltd is making a choice between issuing a public bond and placing the debt privately for GH¢600 million.

Required:
i) Calculate the annual yield (%) the buyers of the public bond will earn. (3 marks)
ii) Compute the cost of both the bond and the private debt. (7 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Agency theory, Bond issuance, Cost of Debt, Private placement
Level: Level 2

Topic: Economic and regulatory environment, Sources of finance: debt
Series: JULY 2023

Question Tag: Agency theory

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FM – Nov 2018 – L3 – Q7 – Corporate Governance and Financial Strategy

Analyze potential agency conflicts between company owners and managers and methods to mitigate these issues.

CSME – Nov 2020 – L2 – Q3 – Corporate Governance

Discuss five theories of corporate governance to assist a newly appointed director.

SCS – Dec 2022 – L3 – Q3 – Strategy, stakeholders, and mission

Explanation of potential agency conflicts minimised by the involvement of a shareholder in management.

BMF – Nov 2021 – L1 – SA – Q17 – The Role of Professional Accountants in Business and Society

Question on who developed agency theory in 1976.

BMF – Mar July 2020 – L1 – SA – Q14 – Basics of Business Finance and Financial Markets

Identifying the developers of Agency Theory.

FM – July 2023 – L2 – Q1 – Economic and regulatory environment | Sources of finance: debt

Discuss the conflicts between management and shareholders, costs associated with appointing management, and calculate the yield and cost of different debt financing options for Gologo Ghana Ltd.

FM – Nov 2018 – L3 – Q7 – Corporate Governance and Financial Strategy

Analyze potential agency conflicts between company owners and managers and methods to mitigate these issues.

CSME – Nov 2020 – L2 – Q3 – Corporate Governance

Discuss five theories of corporate governance to assist a newly appointed director.

SCS – Dec 2022 – L3 – Q3 – Strategy, stakeholders, and mission

Explanation of potential agency conflicts minimised by the involvement of a shareholder in management.

BMF – Nov 2021 – L1 – SA – Q17 – The Role of Professional Accountants in Business and Society

Question on who developed agency theory in 1976.

BMF – Mar July 2020 – L1 – SA – Q14 – Basics of Business Finance and Financial Markets

Identifying the developers of Agency Theory.

FM – July 2023 – L2 – Q1 – Economic and regulatory environment | Sources of finance: debt

Discuss the conflicts between management and shareholders, costs associated with appointing management, and calculate the yield and cost of different debt financing options for Gologo Ghana Ltd.

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FM – Nov 2018 – L3 – Q7 – Corporate Governance and Financial Strategy

Analyze potential agency conflicts between company owners and managers and methods to mitigate these issues.

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CSME – Nov 2020 – L2 – Q3 – Corporate Governance

Discuss five theories of corporate governance to assist a newly appointed director.

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SCS – Dec 2022 – L3 – Q3 – Strategy, stakeholders, and mission

Explanation of potential agency conflicts minimised by the involvement of a shareholder in management.

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BMF – Nov 2021 – L1 – SA – Q17 – The Role of Professional Accountants in Business and Society

Question on who developed agency theory in 1976.

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BMF – Mar July 2020 – L1 – SA – Q14 – Basics of Business Finance and Financial Markets

Identifying the developers of Agency Theory.

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FM – July 2023 – L2 – Q1 – Economic and regulatory environment | Sources of finance: debt

Discuss the conflicts between management and shareholders, costs associated with appointing management, and calculate the yield and cost of different debt financing options for Gologo Ghana Ltd.

You're reporting an error for "FM – July 2023 – L2 – Q1 – Economic and regulatory environment | Sources of finance: debt"

FM – Nov 2018 – L3 – Q7 – Corporate Governance and Financial Strategy

Analyze potential agency conflicts between company owners and managers and methods to mitigate these issues.

You're reporting an error for "FM – Nov 2018 – L3 – Q7 – Corporate Governance and Financial Strategy"

CSME – Nov 2020 – L2 – Q3 – Corporate Governance

Discuss five theories of corporate governance to assist a newly appointed director.

You're reporting an error for "CSME – Nov 2020 – L2 – Q3 – Corporate Governance"

SCS – Dec 2022 – L3 – Q3 – Strategy, stakeholders, and mission

Explanation of potential agency conflicts minimised by the involvement of a shareholder in management.

You're reporting an error for "SCS – Dec 2022 – L3 – Q3 – Strategy, stakeholders, and mission"

BMF – Nov 2021 – L1 – SA – Q17 – The Role of Professional Accountants in Business and Society

Question on who developed agency theory in 1976.

You're reporting an error for "BMF – Nov 2021 – L1 – SA – Q17 – The Role of Professional Accountants in Business and Society"

BMF – Mar July 2020 – L1 – SA – Q14 – Basics of Business Finance and Financial Markets

Identifying the developers of Agency Theory.

You're reporting an error for "BMF – Mar July 2020 – L1 – SA – Q14 – Basics of Business Finance and Financial Markets"

FM – July 2023 – L2 – Q1 – Economic and regulatory environment | Sources of finance: debt

Discuss the conflicts between management and shareholders, costs associated with appointing management, and calculate the yield and cost of different debt financing options for Gologo Ghana Ltd.

You're reporting an error for "FM – July 2023 – L2 – Q1 – Economic and regulatory environment | Sources of finance: debt"

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