Which of the following is true?
A)A free rider contributes to teamwork but does not receive pay
B)Mitigating the agency problem requires alignment of the interests of principal and agent
C)The horizon problem describes agents who focus on the long-term
D)Agency costs are an advertising expense
E)None of the above

Question

Quizplus · Accepted Answer

Mitigating the agency problem refers to finding ways to align the interests of the principal (such as shareholders) and the agent (such as the management team or employees). This is often done through incentive structures and contracts that encourage the agent to act in the best interests of the principal. The other options are incorrect: 
A) Free riders do not contribute to teamwork 
C) The horizon problem refers to agents who focus on short-term gains instead of long-term goals 
D) Agency costs are not an advertising expense, but refer to the costs incurred when trying to manage the agency problem. 
Therefore, the correct answer is B.

Which of the Following Is True