One of the Most Challenging Issues in the Financial Management

question 67

Essay

One of the most challenging issues in the financial management of the enterprise is the possible separation of ownership from management resulting in the so-called principal agent problem. Define the agency problem, explain possible ways to alleviate the agency problem and discuss differences in across global markets.

---

Definitions:

Failing Group

A group that is not able to effectively achieve its goals or fulfill its purpose, often due to internal conflicts or poor organization.

Decategorization

The process of reducing the salience of group categories in interactions, leading to perceptions of others more as individuals than as members of a group.

Recategorization

The process of changing the way groups are categorized, often aimed at reducing prejudice by viewing individuals as part of a larger, inclusive group.

Cross-Categorization

The classification of individuals into multiple overlapping categories or groups based on their characteristics or attributes, which can reduce the effects of stereotyping and prejudice.