Briefly Describe Agency Problems

question 38

Short Answer

Briefly describe agency problems. How can they destroy value in an organization?

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Definitions:

Dividends

Funds distributed to shareholders by a company, typically from its earnings.

Retained Earnings

The portion of a business's profits not distributed to shareholders but reinvested in the business or kept as a reserve.

Net Loss

The amount by which total expenses exceed total incomes for a business over a specific period, indicating a negative financial performance.

Net Income

The total earnings of a company after subtracting all costs and expenses, including taxes and interest, from its total revenues.