How might an lbo mitigate some of the agency problems

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Reference no: EM13881597 , Length: 1029 Words

Question:

Watch "Barbarians at the Gate" (an R-rated film available on youtube). The film chronicles the activities leading up to the leveraged buyout of RJR Nabisco. We will be using the film to explore and catalog some of the agency problems that existed at the firm.

After viewing the movie, you will be asked to complete a graded assignment related to the film
Assignment: Respond to the following issues (total write-up not to exceed 3 pages, double-space, 12 point font).

What is an LBO?

What is a tender offer?

In general (i.e. not specific to the RJR Nabisco case), what is the agency problem between stockholders and managers?

Describe some of the agency problems that existed at RJR Nabisco (i.e. rat hole investments, perk consumption, etc).

How might an LBO mitigate some of the agency problems that existed?

Whose interests are supposed to be represented by the Board of Directors?

Why didn't the RJR Nabisco Board of Directors establish some stricter ground rules for the LBO bid process, just to make its own job easier?

Reference no: EM13881597

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