Differentiate between efficient contracting and opportunism

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Reference no: EM133334505

Questions:

1. Differentiate between efficient contracting and opportunism perspectives with examples.
2. Explain the following with relevant examples:

a. Agency Contract, Problem and Costs

b. Contracting theory

c. Price protection

d. Agency cost

e. Signaling theory

f. Findings of Healy's (1985) research

2 The separation of ownership and management leads to divergent behaviour by agents. Discuss this statement with possible reasoning for divergent behaviour.

3. A firm value represents the worth of the business. Debt value and equity value are part of firm value. Discuss how the entity can increase its equity value through opportunistic behaviour and through efficient contracting.

4. In order to achieve goal congruence/convergence, contracting is important to reduce the severity of divergence as a result of agency problem. Discuss how this can be achieved.

Reference no: EM133334505

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