1)You are the CEO of a company and you are considering entering into an agreement to have...
Question:
1)You are the CEO of a company and you are considering entering into an agreement to have your
company buy another company. CEOs shape strategies and often make final M&A decisions. As a
CEO, you also consult your CFOs, who help identify acquisition targets, conduct due diligence,
arrange financing, and engage in post-deal execution. In other words, CFOs are the Watson to the
CEO's Sherlock. You think the price might be too high and you will be the CEO of the larger
combined company. You expect that your pay and prestige will increase.
(a) Explain the nature of the agency conflict between owners and managers arises from the
above scenario.
(b) Discuss how is it related to ethical considerations.
2)Explain the following terms based on FOUR (4) dimensions (Issuers, Market players, Purpose of
Issuance and Maturity Level).
(a) Common Stocks
(b) Preferred Stocks
(c) Warrants
(d) Bonds
(e) Convertible Bonds
Expert Answer:
a The nature of the agency conflict between owners and managers in the scenario described arises from the misalignment of interests between the two parties The owners who are the shareholders of the c... View the full answer
