The Principal-Agent Problem of Ownership Vs

question 89

Multiple Choice

The principal-agent problem of ownership vs. control of the corporation tends to get worse when:

• A) stock in a corporation is held exclusively by a small number of people who control the company's day-to-day operations.
• B) stock in the company is tightly held, but there are some "outsider" stockholders.
• C) stock in the company is very diffusely held, with no individual or group having control over a large block of stock.
• D) managers have profit-sharing schemes as part of their incentive package.
• E) managers focus on maximizing the firm's profits, rather than the firm's market share.

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Definitions:

Transformational Leadership

A style of leadership where the leader works with teams to identify needed change, creating a vision to guide the change through inspiration and executing the change in tandem with committed members of the group.

Transactional Leadership

A leadership style that focuses on supervision, organization, and performance; rewarding or punishing team members based on their performance.

Interactive Leadership

A leadership style that emphasizes open communication, employee involvement in decision-making, and a strong focus on building relationships.

Leadership Approach

The style or method employed by a leader in guiding, directing, and influencing the work and behavior of others.