One method that businesses use to overcome the principal-agent problem is to:
A) require the board of directors to provide oversight on management.
B) reward management regardless of performance.
C) deny management stock options.
D) not give employees a stake in the business.

Question

Quizplus · Accepted Answer

Requiring the board of directors to provide oversight on management is a method used to align the interests of the principals (owners or shareholders) with those of the agents (management), thereby helping to overcome the principal-agent problem.

One Method That Businesses Use to Overcome the Principal-Agent Problem