What is an example of an action by a financial manager that creates an agency problem?

Marketing Dec 28, 2020

Expert Solution

There would be some examples that cause agency problems between a financial manager and shareholders:

The business generates significant income, but the financial manager suggests not to paying out cash dividends to shareholders while there are no expected use of the excess cash in the future.
The financial manager approves a third party to joint a firm's project since this company provides the financial manager a cash value. This action is against the firm's benefits.

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