In relation to the area of financial reporting, two of the three main agency relationships examined are those between i) the shareholders and

In relation to the area of financial reporting, two of the three main agency relationships examined are those between i) the shareholders and managers of the company and ii) the company and lenders/debtholders.

Required

a) For the two relationships identified above, explain, using appropriate terminology, the nature of the agency problem arising.

b) For these two relationships explain i) how information derived from financial reports is important in solving the problem and ii) the difficulties that can be caused by the use of financial information.

I really need some help in answering part b) as I can’t find up anything online. Any help would be appreciated. Thanks

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