The Principal-Agent Problem in Corporations Exists Because the Managers of a Firm

question 27

Multiple Choice

The principal-agent problem in corporations exists because the managers of a firm:

• A) may pursue their own goals even when the result is lower profit for owners.
• B) may know how to operate the business better than absentee owners do, and yet not be allowed to.
• C) are generally unable to do the monitoring that would result in the firm's avoiding moral hazard problems.
• D) are generally unable to do the monitoring that would result in the firm's avoiding adverse selection.
• E) are generally unable to monitor workers, who do not care about the profits due the managers.

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Definitions:

#include Command

The #include command in C and C++ programming languages is used to include the contents of a file or library in another file.

Main() Function

The primary entry point of a program in many programming languages, where execution begins.

Return Statement

A statement in programming that ends the execution of a function and may return a value to the caller of the function.

Syntax

The set of rules that defines the combinations of symbols that are considered to be correctly structured programs or expressions in a programming language.