Agency Problem - 1

There is an c with this problem. Agency problem is the possibility of conflicts of interests surrounded by the sh ar averers and management of the bulletproof. The firm seems to be more likely to be taken over when the firm is undervalued or not doing well. However, shareholders interest is to max. agate line value per share. Here, if theatre directors receive grant from foreign firms, they would make decisions that go against shareholders interests. Nevertheless, managers incentives return out not fix Canadian economy. Takeovers can bring both advantages and disadvantages for Canadian economy. number one of all, takeovers can be beneficial to Canadian economy. Even though takeover may bring about unemployment and falling of stock at the time of acquisition, buyers must believe that they can amplification the expected profits generated by the firms assets; otherwise, no purchase will take place. Eventually, the purpose of the acquirer is alike to increase the market value of its stock in the hanker run. There are lots of welfare implications from foreign takeovers. On one hand, foreign companies are more competitive in Canada. These foreign companies bring advanced technology from their parent company, which will make Canadian corporations gain competitive advantages. It is helpful for Canadian corporations competing in global market.

(Foreign Direct, 1996) On the other hand, foreign curb investment is considered to be more stable than short-term righteousness or bond flows. As Canada is a large aftermath country, reliance to direct investors may reduce its vulnerability of several(prenominal) financial burdens. (Foreign Direct, 1996) Conglomeration is another topic arises when Canadian corporations are taken over by foreign companies. Initially, a conglomerates manager can reduce profits in one firm and increase them in another. The fear is that profits in firms where insiders own relatively less stock might be deviate to firms where they own most or all of the stock - a kind of corporate shell game. In this case, the... If you want to get a full essay, order it on our website: Orderessay

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