INTRODUCTION In early July 2007‚ the New York based hedge fund Perry Capital proposed to raise its stake in NEC Electronics Corporation (NECE)‚ the then publicly listed subsidiary of Japanese conglomerate‚ NEC Corporation‚ from 4.8 percent to 25 percent. The offering was ¥5‚000 a share‚ at about 60 percent premium. Perry’s investment in NECE traced back to late 2005‚ the year its first exposure to Asian markets‚ with the initial investment cost at around ¥3‚200 a share. Perry believed the intrinsic
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Wk1 DQs What is meant by an "agency cost" or "agency problem"? Do these interfere with shareholder wealth maximization? Why? What mechanisms minimize these costs/problems? Are executive compensation contracts effective in mitigating these costs/problems? Our textbook defines an agency problem as a “conflict between the goals of a firm’s owners and its managers” (Megginson & Smart‚ 2009). It then defines agency costs as dollar costs that arise because of this conflict. In the corporate structure
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THE DUTIES OF THE AGENTS TO PRINCIPAL The duties of an agent depend primarily on the contract of agency if there is one. Subject to any such express terms‚ the agent owes a number of implied duties or obligations to his principal. It is the agency relationship as such that gives rise to these obligations so that‚ as a general rule‚ they fall as much on the gratuitous agent as on the paid agent. 1. Obey the Principal’s instructions Section 164 states‚ The agent must obey the instructions given to
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Principal –agent conflict arise because managers & shareholders view the role of the corporation differently. Investors see corporation as investment vehicles. Shareholders want corporate managers to work diligently and efficiently towards the simple goal of maximizing the value of their ownership stake. However‚ the relationship between the managers of a corporation and its owners is complex. The principle of self-interested behavior tells that people‚ including managers and stockholders‚ work
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elaborate upon the duties that a principal owes to an agent. Answer: An agency is the creation of a contract entered into by mutual consent between a principal and an agent. By agency‚ a principal grants authority to an agent to act on behalf of and under the control of the principal. A principal owes certain contractual duties to his/her agent by an agent will serve the principal loyally and with obedient. The principal duties can be found in section 172
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between the seller / the principal and the representative / the agent is governed by the Law of Agency. A fiduciary relationship created under the law of agency in which one person has a legal authority to act for another‚ can arise from1. 1. An oral or written expressed agreement‚ whereas agent is appointed by the principal for a particular task‚ 2. Ratification of an agent’s conduct that the principle didn’t authorise‚ 3. Implied agreement created by assumed agent authority to enter into
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Cynthia Claude Nkono Moanang 1009040 CORPORATE GOVERNANCE AND BUSINESS ETHICS ASSIGNMENT TOPIC: Principals (shareholders) – agent (managers) problem represents the conflict of interest between management and owners. For example‚ if shareholders cannot effectively monitor the managers’ behaviour‚ then managers may be tempted to use the firm’s assets for their own ends‚ all at the expenses of shareholders. Discuss the pros and cons of this statement with regard to duties of Board of Directors
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Freight Forwarders can act as either a Principal or Agent. Describe in your own words the differences between each. Under what circumstances might a Freight Forwarder want to act as either a Principal or Agent? When Freight Forwarders act as principal‚ they assume all responsibility and liability for the pick-up‚ handling‚ transporting and delivery of the shipment as a regular common carrier would. Their name is on the BOL. When a Freight Forwarder acts as an agent‚ their liability ends once they
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(Sec. 211): The first duty of every agent is to act within the scope of the authority conferred upon him and perform the agency work according to the directions given by the principal. When the agent acts otherwise‚ if any loss be sustained‚ he must make it good to the principal‚ and if any profit accrues‚ he must account for it. Illustrations: (a) Where the principal instructed the agent to warehouse the goods at a particular place and the agent warehoused them at a different warehouse
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DUTIES OF AGENT TO PPRINCIPAL Agent’s duty in conducting principal’s business 164. An agent is bound to conduct the business of his principal according to the directions given by the principal‚ or‚ in the absence of any such directions‚ according to the custom which prevails in doing business of the same kind at the place where the agent conducts the business. When the agent acts otherwise‚ if any loss be sustained‚ he must make it good to his principal‚ and‚ if any profit accrues‚ he must account
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