What Is the Main Way in Which Firms Follow the Owner-

question 22

Multiple Choice

What is the main way in which firms follow the owner- control argument and distribute a high proportion of earnings, and so reduce the principal- agent problem?

• A) Owners can sell shares if they feel managers are adopting a high dividend policy.
• B) Managers have control over investment and so can act in the firm's best interests.
• C) Owners have control over day- to- day running of the firm.
• D) Managers have to ask for investment funds; this subjects their plans to scrutiny.

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Definitions:

Environmental Conditions

The external factors including climate, geography, and natural resources that affect living organisms and human activities.

Implicit Leadership

The idea that leadership qualities are often unconsciously recognized and attributed by followers, beyond explicit leader actions or statements.

Transformational Leadership

A leadership style that inspires positive changes within individuals and organizations by focusing on team goals, morale, and interests beyond self-interest.

Competency

A combination of skills, knowledge, and behavior that is required to perform effectively in a job or activity.