In the Context of Agency Theory, Agents Are More Likely

question 45

Multiple Choice

In the context of agency theory, agents are more likely than principals to focus on:

• A) a long time horizon because they always work for a firm in the long run.
• B) a long time horizon because they have less information about the day-to-day business than do principals.
• C) a short time horizon because it is usually easier to affect firm performance in the short run.
• D) a short time horizon because it is easy for principals to monitor all the decisions made by the agents.

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Definitions:

Negative Reinforcement

A behavior modification process where the likelihood of a behavior is increased by removing or avoiding a negative outcome.

Positive Reinforcement

The process of encouraging or establishing a pattern of behavior by offering rewards when the behavior is exhibited.

Neutral

Describes a state or position of impartiality, or not favoring any side in a conflict, competition, or a situation requiring a choice.

Relearn

The process of learning information, skills, or behaviors again, which were previously learned but may have been forgotten or lost.