Week 1:

Agency Theory look at the organization not from a single entity POV but each of
the stakeholders: shareholders, creditors/debtholders, management, employees.
Conflict of interest can arise when you look at the interest of each stakeholder.
Agency Theory looks at the conflict of interest and how they can resolve
Usually, we look at financial goal from the perspective of the owner: maximize
equity or amount invested
Accounting profit is not equal to financial profit as AP is based on book value.
Market value of shareholder wealth is not equal to share price. If shared of company
are publicly traded, then the market price would be a good value IF the market is
efficient.
Share price how well the company is expected to perform in the future.

One way to increase profit today is to cut cost, but it will increase cost in the
future. E.g. cutting back R&D.
Reported earnings can decline due to investments but there may be an
increase of future cash flow.