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What Is the Most Common Way That Principal-Agent Problems Are

Question 51

Multiple Choice

What is the most common way that principal-agent problems are addressed in most corporations?


A) by minimizing the number of decisions that a manager makes where there is a conflict between the managers interests and those of the shareholders
B) by terminating the employment of employees who are found to have put their own interests above those of the company
C) by using disinterested outside bodies to adjudicate between managers and shareholders when such conflicts arise
D) by prosecuting managers who have been found to have illegally used company moneys for their own benefit
E) by paying the managers high salaries to encourage them to act in the company's interests.

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