Sign In
Not register? Register Now!
Essay Available:
Pages:
2 pages/β‰ˆ550 words
Sources:
Check Instructions
Style:
APA
Subject:
Accounting, Finance, SPSS
Type:
Essay
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 10.53
Topic:

Starting a Software Company

Essay Instructions:

Instructions: Please use references from 2017 to most recent 4 to 5 references, APA Style.
Mini Case
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:
1. 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.
2. Suppose your company raises funds from outside lenders. What type of agency costs might occur? How might lenders mitigate the agency costs?
3. What is corporate governance? List five corporate governance provisions that are internal to a firm and are under its control.
4. Briefly describe the use of stock options in a compensation plan. What are some potential problems with stock options as a form of compensation?
5. Briefly explain how regulatory agencies and legal systems affect corporate governance.
https://www(dot)fitchratings(dot)com/products/rating-definitions.

Essay Sample Content Preview:

Starting a Software Company
Name
Institution
Date
Starting a Software Company
Agency Relationship
An agency relationship involves a situation where there is a fiduciary relationship that arises from consent by one individual to another that the other party will act on behalf of the other party and is subject to their instructions. An agency relationship can be between a company and a contractor who focuses on other activities that support the company's functioning (Lewis, 2021). For example, an agency conflict will not exist if I am the only employee of a large software company or startup since I influence how the organization uses the funds. An agency problem often arises when there is a conflict of interest between the company's management and the shareholders. Since the firm operates to ensure it maximizes the benefits for shareholders, they are answerable to them. On the other hand, if the owner of a company is expected to maintain certain performance levels, then conflicts can arise if their owner has their personal interests with the business (Lewis, 2021). Separating the business ownership from management has numerous benefits that affect regular business activities, and the organization can also employ professionals to handle key activities.
Lenders
If the company raises funds from outside lenders, the agency cost is a debt due to conflict between lenders and borrower who has an active loan with the lender (Lewis, 2021). For instance, the lenders would be useful if the organization decides to invest in a high-cost project such as a very profitable large software data warehouse. The creditors offer a fixed rate of payment with a low-risk rate. If the project is successful, then the company gains. If it fails, the creditors will suffer the loss (Lewis, 2021). In this regard, the higher risk due to the change in assets can lead to a higher return on loan. The same situation can arise if the firm borrows more money to purchase additional servers. The value of debt also reduces since the same number of assets backs larger loans. In both the higher leverage and asset situations, the stockholders benefit more than the creditors.
Corporate Governance
Corporate governance is important so that the decisions are made for the benefit of the company. These choices are based on the regulations, rules, and laws (Madanoglu et al., 2018). It ensures that there is a clear li...
Updated on
Get the Whole Paper!
Not exactly what you need?
Do you need a custom essay? Order right now:
Order

πŸ‘€ Other Visitors are Viewing These APA Essay Samples: