Corporate Issuers
Principal-Agent Relationships
The term ‘principal-agent relationship’ or simply just ‘agency relationship’ is used to describe an arrangement where one entity, the principal, legally appoints another entity, the agent, to act on its behalf by providing a service or performing a particular task….
Company’s Stakeholders
Corporate governance may be defined as the system of internal controls, processes, and procedures by which a company is managed, directed, or controlled. Weak corporate governance practices have resulted in the failures of many companies. Shareholder and Stakeholder Theories Corporate…
Relationship between a Company’s External Environment, Business Model, and Financing Needs
A firm’s financing needs and risk profile depend on its business models and other factors. These factors can be classified into external and firm-specific factors. External Factors Master business environment and financing needs with our Free Trial. Firm-specific Factors Start…
Business Models
A business model outlines how a business is organized to deliver value to its customers. A business model encompasses the following aspects: A business model describes what a business is about, how it runs its operations and generates revenue and…
Public and Private Corporations
A corporation can either be regarded as private or public. This classification is determined by the following factors: 1. Issuance of Shares Public Companies Public companies may issue additional shares in the capital markets to raise huge amounts of capital…
Business Structures
A business is initiated by a founder(s) who possesses significant know-how or expertise. The founder may, nevertheless, lack the skills to manage the business as it grows. Moreover, the founders may lack the capital to grow their business. They may,…
Central Limit Theorem
The central limit theorem asserts that when we have simple random samples, each of size n from a population with mean μ and variance σ2, the sample mean X approximately has a normal distribution with mean μ and variance σ2/n…
Operating, Business, Sales, and Financial Risks
Risk can be defined in several ways. However, one fairly simple definition is that “risk refers to the uncertainty of a return and the potential for financial loss.” Risk can arise from financing and operating activities and can be classified…
