Agency theory (See Chapters 30 and 32 of the Vernimmen) Agency theory says that a company is not a single, unified entity. Agency theory calls into question the claim that all of the stakeholders in the company (shareholders, managers, and creditors) have a single goal – value creation. Agency theory shows how, on the contrary, their interests may differ and some decisions (related to borrowing for example) or how products (stock options) come out of attempts to achieve convergence between the interests of managers and shareholders to protect creditors. Agency theory analyses the consequences of certain financial decisions in terms of risk, profitability and, more generally, the interests of the various parties. Agency theory is the intellectual basis of corporate governance. See also agency costs. Agency theory (See Chapters 30 and 32 of the Vernimmen) Agency theory says that a company is not a single, unified entity. Agency theory calls into question the claim that all of the stakeholders in the company (shareholders, managers, and creditors) have a single goal – value creation. Agency theory shows how, on the contrary, their interests may differ and some decisions (related to borrowing for example) or how products (stock options) come out of attempts to achieve convergence between the interests of managers and shareholders to protect creditors. Agency theory analyses the consequences of certain financial decisions in terms of risk, profitability and, more generally, the interests of the various parties. Agency theory is the intellectual basis of corporate governance. See also agency costs. See all terms in the dictionary of finance To know more about it, look at what we have already written on this subject :

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Definitions of terms begining with the same letter as "Agency theory" :

ABS ADR ANAV APE APT APV Abandonment risk Accelerated book-building Accelerated depreciation Accelerated share repurchase Account balancing Accounting criteria of value creation Accounting currency risk Accounting procedures with an impact on earnings Accounts payable Accounts receivable Accretion Accruals Accrued expense Accrued income Acid test ratio Acquisitions Adjustable rate preference shares Adjustable-rate debt security

Adjusted Net Asset Value Adjusted present value, APV Administrative synergy Advance dividend Affirmative covenant Agency costs Agency theory Agent bank Agent fee Agreement in principle All-in cost All-share transaction Alliance Allocative efficiency Alpha Also called order book. Alternative management American Depositary Receipt American option Amortisation Amortisation of the loan Annual Premium Equivalent Annual effective interest rate Annuity

Annuity factor Apparent dilution Appraisal clause Arbitrage Arbitrage pricing theory, APT Arranger Arranging the deal Asset backed commercial paper Asset backed securities Asset beta Asset contribution Asset coverage Asset turnover Assets Associate Associated undertaking Asymmetry - option Asymmetry - shareholder / creditor Asymmetry – issuer/investor At the money Atypical silent partner Auction Auction clause Average life of a bond