Separating the Functions of Principals and Agents Is Likely to Result

question 46

Multiple Choice

Separating the functions of principals and agents is likely to result in

• A)immobility of financial capital.
• B)diversification of investment risk.
• C)reduction in agency costs.
• D)better goal congruence.
• E)information symmetry.

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Definitions:

Assembly Line

A manufacturing process that breaks down the production into sequential steps carried out by different workers, significantly increasing efficiency.

Gain-Sharing Plan

A type of incentive plan that gives employees a share of the company's saved costs or increased profits, typically resulting from their collective efforts to improve performance.

Team-Based Pay

A compensation strategy where employee earnings are linked to the performance of their team as a whole rather than individual performance.

Operational Outcomes

The results or outputs stemming from the operational activities of an organization, which can include profits, efficiency, and product quality among other factors.