Explain the principal–agent problem in business
Please provide the best answer for the statement.
Large corporations are typically run by company executives or managers (agents) whose interest may not be aligned with those of the company shareholders or owners (principals). The managers may make decisions or allocate funds that make their lives more rewarding and enjoyable such as spending money on lavish offices or perks, but that do not enrich the shareholders. The solution to this problem is to find ways so that the interests of the managers (agents) are aligned or similar to those of the owners (principals).
You might also like to view...
How would the Fed's sale of government bonds on the open market affect the money supply?
What will be an ideal response?
Would a country with an absolute advantage in the production of all goods and services trade with other countries? Explain
What will be an ideal response?
Once active discrimination ends, it:
A. no longer affects people or markets. B. is quickly forgotten, and efficiency is reached. C. can have long-lasting effects on people and markets. D. None of these is true.
The elasticity of supply of rental units in New York City is estimated to be about 0.10. Current price restrictions (price floors) are estimated to decrease the price of rental units by 10% below equilibrium price. By how much would price and quantity supplied change if the price floors were removed from the rental unit market in New York City?
A) Price will increase by 10% and quantity supplied will increase by 1%. B) Price will decrease by 10% and quantity supplied will increase by 1%. C) Price will increase by 10% and quantity supplied will decrease by 1%. D) Price and quantity supplied will increase by 10%.