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Author Question: Which of the following is the best way to prevent an agency problem between shareholders and managers? (Read 85 times)

rayancarla1

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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.
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
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Marked as best answer by rayancarla1 on Apr 25, 2021

aruss1303

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Reply #1 on: Apr 25, 2021
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rayancarla1

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Reply 2 on: Apr 25, 2021
YES! Correct, THANKS for helping me on my review

cpetit11

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

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