Which of the Following Actions Are Likely to Reduce the Agency

question 25

Multiple Choice

Which of the following actions are likely to reduce the agency problem between stockholders and managers?

• A) Congress passes a law that severely restricts hostile takeovers.
• B) A manager receives a lower salary but receives additional shares of the company's stock.
• C) The board of directors has become more vigilant in its oversight of the company's management.
• D) Statements b and c are correct.
• E) All of the statements above are correct.

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Definitions:

Law Firm

A business entity formed by one or more lawyers to engage in the practice of law, providing legal services to clients.

Privately Owned

Properties or businesses that are owned by individuals or corporations rather than by the government or public.

Corporation

A legal entity recognized by law as separate from its owners, with rights to own assets, incur liabilities, and conduct business.

Closely Held

A business structure where the ownership is concentrated in a small group of individuals, often family members.