Call us 24/7: + 1(925)399 0085

Get your paper done by an expert

No matter what kind of academic paper you need, it is simple and secure to hire an essay writer for a price you can afford at StudyAcer. Save more time for yourself.

WhatsApp + 1(925)399 0085
$ 10
free
  • bibliography
  • title page
  • revisions
per page
19 k happy customers
4.7 out of 5 satisfaction rate
27 writers active

Genzyme Corporation sample essay

Genzyme has a tradition to be financed with equity. High equity ratio has advantages such as low agency costs related to debt, lower financial stress and more flexibility for management, which is especially crucial for start-up companies, such as in the early stage of Genzyme. However, besides losing the tax shield from debt, high equity financing leads to an increasingly diffused ownership, which would in turn causes problems such as shareholder – management principal – agent problem and asymmetric information problem. Principal – agent problem: As agent of the shareholder (principal), management should aim at maximizing shareholders’ value, i.e. the market value of the equity. However, management tends to serve its own interests. In order to make management act in line with the shareholders’ interest, agency costs of managerial incentives are induced. For Genzyme, to increase leverage is one way to reduce managerial incentives related agency costs. However, management generally does not prefer debt, since higher leverage implies higher risk for bankruptcy as financial distress increases with the leverage level. In order to mitigate this problem, Genzyme can try to offer compensation contracts which reflect compensation to the firm specific risks that managers are facing.

This will make sure management to act in line with shareholders’ interest. Beside principal – agent problem, low debt equity ratio can also cause high adverse selection cost induced by asymmetric information. Asymmetric information problem: the separation of ownership and control of the firm will lead to asymmetric information problem. Management obviously has more information than shareholders and often will not disclose certain crucial information about firm’s strategic plans or operations. This will naturally have impact on the market value of a public traded firm like Genzyme. With asymmetric information, the market value of the firm might not reflect the true value of the firm. The market value tends to reflect a pooling equilibrium, because of high adverse selection. Fully separating equilibrium can only be obtained through firm’s sending unique, powerful but costly signals to the market. Therefore, Genzyme Corporation faces high signaling cost related to adverse selection induced by asymmetric information problem. Debt again serves good to mitigate information asymmetry problem and to discipline management.

Our guarantees

Study Acers provides students with tutoring and help them save time, and excel in their courses. Students LOVE us!No matter what kind of essay paper you need, it is simple and secure to hire an essay writer for a price you can afford at StudyAcers. Save more time for yourself. Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Our Homework Writing Disciplines

With a highly diverse team in almost all academic fields including: