Mini case | Business & Finance homework help

 

Instructions

Answer the following questions in a separate document. Explain how  you reached the answer or show your work if a mathematical calculation  is needed, or both. Submit your assignment using the assignment link.

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This course requires the use of Strayer Writing Standards. For  assistance and information, please refer to the Strayer Writing  Standards link in the left-hand menu of your course. Check with your  professor for any additional instructions.

Mini Case

Suppose you decide (as did Steve Jobs and Mark Zuckerberg) to start a  company. Your product is a software platform that integrates a wide  range of media devices, including laptop computers, desktop computers,  digital video recorders, and cell phones. Your initial client base is  the student body at your university. Once you have established your  company and set up procedures for operating it, you plan to expand to  other colleges in the area and eventually to go nationwide. At some  point, hopefully sooner rather than later, you plan to go public with an  IPO and then to buy a yacht and take off for the South Pacific to  indulge in your passion for underwater photography. With these plans in  mind, you need to answer for yourself, and potential investors, the  following questions:

  1. What is an agency relationship? When you first begin operations,  assuming you are the only employee and only your money is invested in  the business, would any agency conflicts exist? Explain your answer.
  2. Suppose your company raises funds from outside lenders. What type  of agency costs might occur? How might lenders mitigate the agency  costs?
  3. What is corporate governance? List five corporate governance provisions that are internal to a firm and are under its control.
  4. Briefly describe the use of stock options in a compensation plan.  What are some potential problems with stock options as a form of  compensation?
  5. Briefly explain how regulatory agencies and legal systems affect corporate governance.

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