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:

Consumer Surplus

The difference between what consumers are willing to pay for a good or service compared to what they actually pay.

Consumer Surplus

The difference between the total amount that consumers are willing to pay and the total amount they actually pay.

Bananas

A type of edible fruit produced by various large, herbaceous plants in the genus Musa.

Consumer Surplus

The contrast between how much consumers are ready to pay for a good or service versus what they actually spend.