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Agency problem |
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Agency problemConflicts of interest among stockholders, bondholders, and managers.Agency problem Similar MatchesReplacement chain problemReplacement chain problemIdea that future ../../finance-glossary/ment decisions must be taken into account in selecting among projects. Collective action problemCollective action problemThe difficulty of getting a group to act when members benefit if others act, but incur a net cost if they act themselves. Underinvestment problemUnderinvestment problemThe mirror image of the asset substitution problem, in that stockholders refuse to invest in low-risk assets to avoid shifting wealth from themselves to debtholders. Assignment problemAssignment problemHow to use macroeconomic policies to achieve both internal balance and external balance; specifically, with only monetary and fiscal policies available under fixed exchange rates, which instrument should be "assigned" to which goal? Mundell (1962) showed that monetary policy should be assigned to external balance. |
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