Governance mechanisms help align the incentives between principals and agents, and monitor and control agents.

Question

Quizplus · Accepted Answer

Governance mechanisms are put in place to help align the interests and incentives of principals and agents, and to monitor and control the actions of agents to ensure that they act in the best interests of the principals. Some examples of governance mechanisms include incentives, monitoring and reporting systems, performance metrics, and systems of accountability and control.

Governance Mechanisms Help Align the Incentives Between Principals and Agents