(a) What is meant by the term agency cost? Discuss a real incident where the executives...

   

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(a) What is meant by the term agency cost? Discuss a real incident where the executives or managers of a business organisation may have undertaken some actions that you feel have led to agency costs. Then, discuss any two measures that can be adopted to avoid similar agency costs. marks] [2+3+5=10 (b) Does agency cost occur in all 3 legal forms of businesses (i.e., sole-trader, partnership, and company)? Why or why not? Discuss. [4 marks] (c) We have covered the three main roles of financial managers (capital budgeting, financing decision and working capital management). Please have a thought on these roles. How can agency costs occur during a manager undertaking each of these roles? Can you give any examples? [6 marks] (a) What is meant by the term agency cost? Discuss a real incident where the executives or managers of a business organisation may have undertaken some actions that you feel have led to agency costs. Then, discuss any two measures that can be adopted to avoid similar agency costs. marks] [2+3+5=10 (b) Does agency cost occur in all 3 legal forms of businesses (i.e., sole-trader, partnership, and company)? Why or why not? Discuss. [4 marks] (c) We have covered the three main roles of financial managers (capital budgeting, financing decision and working capital management). Please have a thought on these roles. How can agency costs occur during a manager undertaking each of these roles? Can you give any examples? [6 marks]

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a Agency cost refers to the cost incurred due to conflicts of interest between the owners principals and the agents managers of a business organizatio... View the full answer