Author Question: Which of the following is the best way to prevent an agency problem between shareholders and managers? (Read 81 times)

rayancarla1 · **on:** Apr 25, 2021

Question 1

Which of the following is an advantage of a partnership?
◦ No license, charter, or agreement legally required
◦ Joint liability for company debts
◦ Least regulated form of business
◦ Ownership is easy to transfer
◦ Can raise money using capital markets (debt and equity)

Question 2

Which of the following is the best way to prevent an agency problem between shareholders and managers?
◦ Maintain a proportional relationship between a manager's bonus and the number of employees in the firm.
◦ Compensate managers to a significant degree with shares of stock in their firm.
◦ Reward managers if they keep costs below the budgeted amount.
◦ Pay managers a bonus if their division exceeds its targeted market share.
◦ Pay managers a bonus if their division exceeds its quarterly sales target.

aruss1303 · **Reply #1 on:** Apr 25, 2021

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