While the purpose of governance mechanisms is to reduce the scope and frequency of the agency problem, they are not involved in the alignment of the interests of business-unit managers with those of their superiors.

Question

Quizplus · Accepted Answer

Governance mechanisms are indeed involved in aligning the interests of business-unit managers with those of their superiors, as this alignment is a key strategy to mitigate the agency problem by ensuring that managers' decisions are in the best interest of the company and its shareholders.

While the Purpose of Governance Mechanisms Is to Reduce the Scope