. If you expanded and hired additional people to help you, might that give rise to agency problems?
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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 market 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 issues in mind, you need to answer for yourself, and potential investors, the following questions. |
Explanation
The agency problems may arise with the employment of additional people in the business as different people have different interests and they all work to achieve their own motive which may result in conflict of interests among them.
Verified Answer
Yes, agency problems may arise with the employment of additional people in the firm.
