Suppose you need additional capital to expand and you sell some stock to outside investors. If you maintain enough stock to control the company, what type of agency conflict might occur?

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If I need additional capital, I will have to sell some stock to potential investors. Selling shares to the new employees raises revenue for the company and gives the new investors ownership rights. The company also increases the dividend obligation payable to the shareholders at the end of the trading period.

The type of agency conflict that may occur as a result of the sale of shares outside is a conflict between the managers of the company and the shareholders. Other conflicts that may arise from the sale of stock to outsiders are conflicts between managers and creditors and stockholders and creditors.

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Academic.Tips. (2023) 'Suppose you need additional capital to expand and you sell some stock to outside investors. If you maintain enough stock to control the company, what type of agency conflict might occur'. 11 March.

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Academic.Tips. (2023, March 11). Suppose you need additional capital to expand and you sell some stock to outside investors. If you maintain enough stock to control the company, what type of agency conflict might occur? https://academic.tips/question/suppose-you-need-additional-capital-to-expand-and-you-sell-some-stock-to-outside-investors-if-you-maintain-enough-stock-to-control-the-company-what-type-of-agency-conflict-might-occur/

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Academic.Tips. 2023. "Suppose you need additional capital to expand and you sell some stock to outside investors. If you maintain enough stock to control the company, what type of agency conflict might occur?" March 11, 2023. https://academic.tips/question/suppose-you-need-additional-capital-to-expand-and-you-sell-some-stock-to-outside-investors-if-you-maintain-enough-stock-to-control-the-company-what-type-of-agency-conflict-might-occur/.

1. Academic.Tips. "Suppose you need additional capital to expand and you sell some stock to outside investors. If you maintain enough stock to control the company, what type of agency conflict might occur?" March 11, 2023. https://academic.tips/question/suppose-you-need-additional-capital-to-expand-and-you-sell-some-stock-to-outside-investors-if-you-maintain-enough-stock-to-control-the-company-what-type-of-agency-conflict-might-occur/.

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Academic.Tips. "Suppose you need additional capital to expand and you sell some stock to outside investors. If you maintain enough stock to control the company, what type of agency conflict might occur?" March 11, 2023. https://academic.tips/question/suppose-you-need-additional-capital-to-expand-and-you-sell-some-stock-to-outside-investors-if-you-maintain-enough-stock-to-control-the-company-what-type-of-agency-conflict-might-occur/.

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"Suppose you need additional capital to expand and you sell some stock to outside investors. If you maintain enough stock to control the company, what type of agency conflict might occur?" Academic.Tips, 11 Mar. 2023, academic.tips/question/suppose-you-need-additional-capital-to-expand-and-you-sell-some-stock-to-outside-investors-if-you-maintain-enough-stock-to-control-the-company-what-type-of-agency-conflict-might-occur/.

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