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- Title
The Relationship Between Agency Theory and Lack of Control Discounts.
- Authors
Trevino, Gene A.
- Abstract
This article explores the relationship between agency theory and the application of a discount for lack of control (DLOC) in valuing noncontrolling interests in closely held entities. Agency theory examines the costs that arise when management and ownership are separated, and it addresses the challenges faced by noncontrolling owners in closely held entities. The article argues that understanding agency theory is crucial for justifying the use of a DLOC in valuations. It also discusses ways to reduce agency costs and the relevance of agency theory for owners of noncontrolling interests in closely held entities. The author, Gene A. Trevino, an economist with Economic Evidence, highlights the importance of having a solid understanding of agency theory in the field of closely held business valuation and economic damages calculation. Dr. Trevino has extensive experience as an expert witness in these areas.
- Subjects
AGENCY theory; BUSINESS enterprises; BUSINESS valuation; STOCKS (Finance); COST control; CAREER development; AGENCY costs; FINANCIAL economics
- Publication
Value Examiner, 2024, p12
- ISSN
1094-3137
- Publication type
Article