Tying Salaries of Top Managers to the Profits of the Firm

question 84

True/False

Tying salaries of top managers to the profits of the firm is a way to reduce the effect of the principal-agent problem.

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Definitions:

Personality

The mix of traits or attributes that create a person's unique personality.

Unconscious

The part of the mind that is inaccessible to the conscious mind but that affects behavior and emotions.

Ego

In psychoanalytic theory, the part of the personality that mediates between the demands of the id, the superego, and the external world.

Ego

In psychoanalytic theory, the part of the personality that mediates between the desires of the id and the constraints of the superego and reality, playing a key role in decision making and behavioral regulation.