Agency problems are reduced by:

Question

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All of these choices can help reduce agency problems. Monitoring management behaviour ensures that agents are held accountable for their actions, while the ability for shareholders to sell their shares ensures that they can easily exit the firm if they are dissatisfied with management. The threat of a takeover can also incentivize management to act in the best interests of shareholders to avoid being acquired by another firm. Together, these measures can help mitigate the principal-agent problem and reduce agency costs.

Agency Problems Are Reduced By