Buying Firms Prefer a Transactional Relationship When There Are Few

question 40

True/False

Buying firms prefer a transactional relationship when there are few alternatives and the complexity of purchase is high.

---

Definitions:

Agency Problem

A conflict of interest arising between decision-makers (agents) and the owners (principals) due to differing goals.

Managements' Compensation

The financial and non-financial rewards given to corporate management, which may include salary, bonuses, stock options, and other benefits.

Auditors

Professionals or firms appointed to review and verify an organization's financial records and statements to ensure accuracy and compliance with accounting standards.

Financial Asset

An intangible asset whose value is derived from a contractual claim, such as stocks, bonds, and bank deposits.