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 47 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
Gracias!

cpetit11

  • Member
  • Posts: 321
Reply 3 on: Yesterday
Great answer, keep it coming :)

« previous next »
 

Did you know?

People with alcoholism are at a much greater risk of malnutrition than are other people and usually exhibit low levels of most vitamins (especially folic acid). This is because alcohol often takes the place of 50% of their daily intake of calories, with little nutritional value contained in it.

Did you know?

Common abbreviations that cause medication errors include U (unit), mg (milligram), QD (every day), SC (subcutaneous), TIW (three times per week), D/C (discharge or discontinue), HS (at bedtime or "hours of sleep"), cc (cubic centimeters), and AU (each ear).

Did you know?

People often find it difficult to accept the idea that bacteria can be beneficial and improve health. Lactic acid bacteria are good, and when eaten, these bacteria improve health and increase longevity. These bacteria included in foods such as yogurt.

Did you know?

For pediatric patients, intravenous fluids are the most commonly cited products involved in medication errors that are reported to the USP.

Did you know?

Amphetamine poisoning can cause intravascular coagulation, circulatory collapse, rhabdomyolysis, ischemic colitis, acute psychosis, hyperthermia, respiratory distress syndrome, and pericarditis.

Malignant melanoma. This photograph demonstrates the highly characteristic color of this tumor. Malignant melanoma. This photograph demonstrates the highly characteristic color of this tumor.
GI series. (a) Upper GI series begins with a barium swallow, barium shake, or barium meal. (b) Lower GI series. (a) Upper GI series begins with a barium swallow, barium shake, or barium meal. (b) Lower
Question Above Question Above
How to solve a trigonometric problem involving two right triangles (Question 1) How to solve a trigonometric problem involving two right triangles (Question 1)
Problem Problem
economic question economic question
Video: Female Reproductive System - Hormonal regulation (GnRH) الجهاز التناسلي للأنثى - التنظيم الهرموني

For a complete list of videos, visit our video library