Lisa Bental, Senior VP of operations at Hakim Electronics, is currently reviewing the company’s proposed acquisition of Shakeel Electronics. The board at Hakim Electronics is waiting for Lisa’s report prior to voting on the acquisition. Hakim Electronics is a Canadian firm, while Shakeel Electronics primarily does business in Mexico. Lisa has been told that should the acquisition take place; she will have to relocate to Mexico for a couple of years to transition Shakeel Electronics into the family. Lisa has been vocally opposed to the idea of moving to Mexico. During the presentation to the board, she suggests that the acquisition is a bad idea, due to the risk of doing business in Mexican Pesos, which are highly volatile. 

Required:

A. Define Agency Problems, 

B. Discuss if Lisa’s presentation to the board is an example of an Agency Problem.  

C. Discuss Lisa's concerns about the Mexican Pesos depreciating, and how this could impact the value of the acquisition?

Answer rating: 100% (QA)

A Agency Problems The agency problem is actually a conflict of interest that occurs between the two parties when one party is expected to act in the b... View the full answer