This example is from Wikipedia and may be reused under a CC BY-SA license.
There are three classes of agents interacting at the firm level : the manager of the firm, a representative single worker, and outside shareholders.
Thus the drawbacks for outside shareholders are the power sharing and the eventual dilution costs.
Consequently, with the latter method, outside shareholders benefit from the monitoring conducted by the worker without explicitly paying for it.
As usually stated in the corporate finance literature, outside shareholders are diversified, so they act as risk neutral agents by maximizing their expected final wealth.
Outside shareholders gain from the productivity of the worker in the value creation process.
Outside shareholders gain from the effort exerted by the worker.
These examples are from corpora and from sources on the web. Any opinions in the examples do not represent the opinion of the Cambridge Dictionary editors or of Cambridge University Press or its licensors.