To Mitigate Deadweight Costs Associated with the Shareholder-Management Principal-Agent Conflict

question 4

Multiple Choice

To mitigate deadweight costs associated with the shareholder-management principal-agent conflict, some investors become major shareholders and attempt to influence management to act in the best interest of shareholders.This is an example of:

• A)a takeover.
• B)shareholder activism.
• C)packing the board.
• D)principal intervention.

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Definitions:

Minor

An individual under the age of legal adulthood, typically seen as below the age of 18 in most jurisdictions.

Statute of Frauds

A legal principle requiring certain types of contracts to be written and signed to be enforceable.

Oral Contract

An agreement between parties that is spoken and not formally recorded in written form, yet is legally binding.

Enforceable

Capable of being imposed or executed in accordance with the law.