MGT 3062 Lecture Notes - Lecture 1: Sports Agent, Cash Flow

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21 Aug 2020
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An agency relationship (or principal agent relationship) occurs whenever one party (the principal) delegates responsibility for some task or function to another (the agent) Real estate agent (you and real estate agent) (acting on behalf of you) Sports agent (acting on behalf of athlete) Might not want to take as much risk than equity holders. Pay manager in things like stock options. Reputation i. e. as an ceo, the ceo might be afraid of not doing a good job which will affect the reputation of getting the next job. Average boards are comprised of 9 members. Make sure principal agency relationship is healthy. Recent ceo turnovers include those from coke, hershey, wells fargo, among others. In theory, takeovers follow mismanagement or poor governance. Consider a machine that spits out a bill once each year. It will keep generating this money every year forever. Assume that you have a different machine.

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