In the principal-agent framework, the ultimate principals are
I.managers;
II.board of directors;
III.shareholders;
IV.governments
A)I and II only
B)IV only.
C)III only
D)I, II, and III only

Question

Quizplus · Accepted Answer

In the principal-agent framework, the ultimate principals refer to those who own the company, namely the shareholders. The other answer options, such as managers, board of directors, and governments, may be considered intermediaries between the shareholders and the agents (employees). However, they are not the ultimate principals who have the final say in the decision-making and control of the company. Therefore, choice C) III only is the best answer.

In the Principal-Agent Framework, the Ultimate Principals Are