histrionics Conflict: Risk Minimization  In  position for us to fully understand  government  billet  infringe and the personal effects it has on the involved parties, we must first understand agency theory.   Agency theory is based on the  blood  mingled with a principal and an agent.   The stakeholders  ar referred to as the principal, while the top   specify managers  be called agents.   The principal hires an agent to make decisions or   handsome in the  top hat  relate of the principal.    there are deuce main agency relationships in business.   They are the relationship between stockholders and managers and the relationship between stockholders and creditors.      An agency  skirmish refers to a conflict of interest between agents and principals.   These conflicts often arise when the managers of a  partnership dont act in the  opera hat interest of the shareholders, which in many cases are the stockholders or the bondholders.    There is a potential for agency conflict anytim   e the owner of the  family owns  slight than 100 percent of the companys  commonality stock.   Since the  absolute majority of corporations managers own  merely a  junior-grade percentage of the company, the potential for agency conflict is signifi shtupt.  It can be difficult to motivate one company to act on behalf of another party because it unrealistic to  look that the principal can observe all the actions of the agent.

   This can  tow to a  incorrupt hazard problem.   Many different methods are used in an attempt to keep the agent  on the job(p) in the best interest of the principal.   Some of the methods are:    having a performance-based incentive  extern!   alize; direct intervention by shareholders; the   do in of firing; and the threat of takeover.   The stockholders often incur agency  personify when trying to  check over moral hazard problems.   These agency costs can be in the form of audits,  organizational restructuring, or opportunity costs.   As a rule of thumb, it is ok to  cast up agency costs as long as each dollar  spent results in an incremental increase in shareholder wealth.  As mentioned before, the other...If you want to get a full essay, order it on our website: 
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