This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Explain the principal/agent problem encountered by corporations.[br][br][b][color=#566D7E]Question ... (Read 34 times)

Davideckstein7

  • Hero Member
  • *****
  • Posts: 555
on: Jun 30, 2018
Explain the principal/agent problem encountered by corporations.

Question 2

A problem associated with the principal-agent relationship is
 A) imperfect information.
  B) perfect information.
  C) the low costs of monitoring behavior.
  D) none of these choices.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

Fayaz00962

  • Sr. Member
  • ****
  • Posts: 330
Reply #1 on: Jun 30, 2018
Answer to Question 1

Shareholders are principals and directors are their agents. Shareholders want decisions from the board of directors that maximize the value of their shares. As in other principal/agent situations, shareholders entrust others to perform tasks that they cannot easily monitor. Monitoring is costly, and evaluating the quality of the board's work is difficult because the best decisions in many business situations are seldom obvious, even in retrospect. As in other applications of principal/agent theory, random events can further compound the monitoring problem.

Answer to Question 2

A


Davideckstein7

  • Member
  • Posts: 555
Reply 2 on: Jun 30, 2018
Excellent

amcvicar

  • Member
  • Posts: 341
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

Inotropic therapy does not have a role in the treatment of most heart failure patients. These drugs can make patients feel and function better but usually do not lengthen the predicted length of their lives.

Did you know?

About 3% of all pregnant women will give birth to twins, which is an increase in rate of nearly 60% since the early 1980s.

Did you know?

The U.S. Preventive Services Task Force recommends that all women age 65 years of age or older should be screened with bone densitometry.

Did you know?

More than 2,500 barbiturates have been synthesized. At the height of their popularity, about 50 were marketed for human use.

Did you know?

Children with strabismus (crossed eyes) can be treated. They are not able to outgrow this condition on their own, but with help, it can be more easily corrected at a younger age. It is important for infants to have eye examinations as early as possible in their development and then another at age 2 years.

How to plot a sine function containing an amplitude and phase shift (Question 1 of 3) How to plot a sine function containing an amplitude and phase shift (Question 1 of 3)
Sequence Series Arithmatic Progression Problem Sequence Series Arithmatic Progression Problem
Solve this probability question Solve this probability question
Diagram illustrating the difficulty encountered during the replication of the ends of linear chromos Diagram illustrating the difficulty encountered during the replication of the ends of linear chromos
economic question economic question
Differential Equation Word Problem Differential Equation Word Problem
Video: Nerve Impulse Transmission Animation

For a complete list of videos, visit our video library