External financing requirements and agency conflicts

We examined two important topics in finance during this unit: external financing requirements and agency conflicts. Address the prompts below.
Include an introduction that summarizes the main points with an example.
Critically reflect on the importance of external financing requirements. What key factors must be considered when determining external financing requirements?
Briefly describe the types of agency conflict, and provide an example of at least one of the types of agency conflict to support your response.
Should be at least two pgs in length, not counting the title and reference pg.

Sample Solution

This essay examines the role stock options play in addressing the agency issues with external capital that Jensen and Meckling first observed (1976). Managerial incentives a) to consume excessive non-financial advantages or perquisites above the amount that is ideal for sole ownership and b) to participate in risk shifting in order to transfer wealth from external capital contributors are the root causes of these issues. An approach that carefully blends call and put options held by the owner-manager and external financiers, respectively, can alleviate these incentive concerns. The settlement of the agency issues via this method offers a financial justification for the existence of convertible debt and managerial stock options.

Pantheon embodies everything Hadrian was as a person during the early portion of his ruling. It was very much a fusion of Greek and Roman principles that mirrored Hadrian’s inner character. He shared grand Roman pride with the people he served, and they would forever see the Pantheon as a symbol of that pride. However, as Hadrian matured as a ruler, saw more of the world, and returned to Rome for short periods at a time, there was a monumental shift in his opinions of his own capital.

Not unlike Trajan, there was another man who played an integral role in Hadrian’s life. His name was Antinous, and although not many specifics are known about his life and relationship with Hadrian, we do know that he was from Bythnia. The two met there when critics believe Antinous was the age of eighteen. “To say that he was \”like a son\” to Hadrian is to put a charitable slant on their rapport. It was customary for a Roman emperor to assume the airs, if not the divine status, of the Olympian god Jupiter.” Though it was never explicitly stated or denied, it is widely believed that Hadrian and Antinous were more than just friends, but lovers.

As a part of Hadrian’s entourage, Antinous naturally went on all of the quests that led him to see the world. It was on one of these expeditions along the Nile River that Antinous lost his life, and forever plagued the mind of the now devastated emperor. Some say Antinous was murdered by his ship mates, while others even speculate that Hadrian may have sacrificed him in a testament to Egyptian mystery cults that involved Antinous’ sacrifice as a way for Hadrian to gain immortality. Nevertheless, Hadrian went on to express his admiration for the boy to the world at large. He ordered the production of his image in full scale statues, busts, and miniature printings on coins and other various items. “Full lips, slightly pouting; a fetching cascade of curls around his soft yet squared-off face; somewhat pigeon-breasted, but winningly athletic, his backside making an S-curve that begs to be stroked… one could rhapsodise further, but it is more telling to stress the sheer quantity of production.”

The most fascinated reason I have come to discover about Hadrian’s mass production of Antinous’ image is that of classical religious revival. “Hadrian knew about the Christians, whom he regarded as harmless idiots; he waged war against the Jews, who challenged his authority.” He presented Antinous as Dionysos, Pan, and as a second Apollo. Each of these disguises are intricately portrayed on images of Antinous in order to reinstall his personal views to the people he ruled.

Today the image of Antinous has survived even in Western culture. What we p

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