Asked by Tu?çe Ca?k?r on Sep 24, 2024

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​Which of the following is a way to reduce agency costs?

A) ​Change the decision maker
B) Transferring information to the decision maker
C) Change the decision maker's incentives
D) ​All of the above

Agency Costs

Expenses arising from the conflict of interest between a company's management and its shareholders.

Incentives

Motivators or rewards given to encourage specific actions or behaviors by individuals or groups.

Decision Maker

An individual or entity responsible for making choices, often involving the selection of strategies, policies, or solutions in personal, business, or governmental contexts.

  • Pinpoint solutions for overcoming obstacles posed by principal-agent problems in business structures.
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YZ
Yasides Zapolski2 days ago
Final Answer :
D
Explanation :
All options are ways to reduce agency costs. Changing the decision maker can improve decision-making quality, transferring information can reduce information asymmetry, and changing the decision maker's incentives can align their interests with those of the principal. Therefore, utilizing all of these methods can be effective in reducing agency costs.