Asked by Jaysen Thompson on Sep 24, 2024
Verified
To solve the principle agency problem,which of the following questions should you ask
A) Who is making the bad decision?
B) Does the decision maker have all the relevant information?
C) Does the decision maker have the incentive to make the right decision?
D) All of the above
Principle Agency Problem
A situation in corporate governance where the interests of principals (owners) diverge from those of agents (managers), leading to potential conflicts.
Incentive
A benefit or reward intended to motivate or encourage a specific action or behavior in economic or organizational contexts.
Decision Maker
An individual or entity responsible for making choices that will impact outcomes in a business, policy, or personal context.
- Ascertain techniques to manage principal-agent disparities within corporate entities.
Verified Answer
AN
Anelya Nazarbayeva3 days ago
Final Answer :
D
Explanation :
All of the above questions should be asked to solve the principle agency problem. Specifically, identifying who is making the bad decision, ensuring the decision maker has all the relevant information, and assessing whether they have the incentive to make the right decision are all key considerations in addressing the principal agency problem.
Learning Objectives
- Ascertain techniques to manage principal-agent disparities within corporate entities.