One method that businesses use to overcome the principal-agent problem is to:
A) not require the board of directors to oversee management.
B) reward executives and managers who make poor decisions.
C) not give stock options to management.
D) give employees a stake in the business.

Question

Quizplus · Accepted Answer

Giving employees a stake in the business aligns their interests with those of the owners, thereby mitigating the principal-agent problem by motivating employees to act in the best interests of the business.

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