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:
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.
Suppose your company raises funds from outside lenders. What type of agency costs might occur? How might lenders mitigate the agency costs?
What is corporate governance? List five corporate governance provisions that are internal to a firm and are under its control.
Briefly describe the use of stock options in a compensation plan. What are some potential problems with stock options as a form of compensation?
Briefly explain how regulatory agencies and legal systems affect corporate governance.
asing price of illicit drug to consumers, for example in the USA, during 1980’s and early 1990’s, the consumption level was very low, as the youths were less likely to experiment using illicit drug, due to its high cost but during the 1980’s, people were more likely going to experiment using drug due to the low price, because it is readily affordable, as marijuana was very cheap and affordable, making it more likely that the consumption level will rise again as marijuana will be the choice drug of the youths and adults; in contrast to cocaine and heroin, which is a high class drug. The experimental level was so low, because the price of class A drugs were high, making, researchers to conclude that, increase price, makes consumption level to be low, while the consumption level increases when the price is low, however, both the use of heroin and cocaine have the same pattern (NHSDA). Moreover, increase price due to increase risk, might encourage consumers to look inward rather than outward in drug consumption. Consumers may have a rethink on the amount of drug they will be able to buy when price is high, hence the consumer, will put into consideration on the amount of money he will use for other household items, and may choose to purchase lower dose of illicit drug with the same amount of money, hence overspending on the cost of drug will affect other household expenses. The addict may also choose between going to prison and deciding to take drug treatment/rehabilitation in other to quite, or alternatively may switch over to other types of drug, which is cheaper than cocaine or heroin. It could be said that demands for illicit drugs substances could be attributed to price elasticity, and other factors that could determine the price could be market factors other than price can contribute to drug demand shift. But the price may be associated with the relationship between the quantity and quality of drug demanded as shown in the drug market curve, as each action influences changes in price.(Market for drugs, National Research Council. 2010). Moreover; it could be argued that, increased price of illicit drug as a result of increased risk, will reduce the competition and consumers will have a choice of using heroin, cocaine or switch to alternative cheaper drugs like cannabis, amphetamine-type stimulants, and other readily available synthetic substance, or alcohol which can be obtained at shop without restriction. The availability of alternative drugs as indicated above is a challenge on policies aimed at drug reduction, as most of these items like the cannabis can be cultivated indoors at any location regardless of climate and other factors that placed the production of opium or Cocoa leaf to a particular geographical area. The use of price and purity to determine the consumption level by addicts will not be realistic. Furthermore, increased risk do not deter drug traffickers, rather it will increase the >GET ANSWER