| Corporate finance course | Questionson "Agency" concerns |
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| Definition of agency: The firm and more generally, society is composed of people that do not share the same goals and do not have access to the same source of information. So, they choose to arrange contracts that satisfy each party. • Stockholders vs. bondholders: do they share the same goal ? Does that matter ? They do not wish the same, but only stockholders have the power in the firms. • How often do stockholders have a chance to exercise their opinions as to what a firm should do? What happens for other decisions? • Managers vs. stockholders: Do managers share stockholders' goals? Sources of conflicts: Work amount, "perks", but Resolution - design of incentives, Stock ownership. However the resolution of these conflicts is not so easy in France and even more in the Czech Republic (and Bulgaria). Even if it's not true in these countries, we suppose that if managers do not work efficiently, they'll be sacked. • Why do we view stockholder unanimity as necessary for a theory of optimal decision-making? So the financial manager has only one mission: maximize the NPV. He doesn't need to know each shareholder's preference and aversion towards risk. Opportunity cost of capital, risk and return >> |
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Corporate finance PART ONE: CAPITAL EXPENDITURE PART TWO. BASICS OF FINANCE PART THREE FINANCING DECISIONS PART FOUR FINANCIAL MANAGEMENT Course created and updated by Dr David Chelly, PhD in Management sciences from the University of Tours.
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