Principal-agent conflict

Successful IR can contribute to build up confidence in the com-pany. Simultaneously the principal-agent conflict between management and shareholders or bondholders can be mitigated. This depends on regular and extensive reporting to make the company s operations understandable, because uncertainty means risk. Information can significantly reduce the risk sensitivity of investors the higher the quantity and quality of the information published by the company, the smaller the premium for uncertainty should be (see Exhibit 2.7). 

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