Once a Firm Has Thousands of Shareholders the Agency Problem

question 57

Multiple Choice

Once a firm has thousands of shareholders the agency problem is accentuated because of:

• A)Coordination difficulties
• B)Coordination difficulties, and it is easier for disgruntled stockholders to sell their shares than engage management
• C)Coordination difficulties and information asymmetry
• D)The costs of engagement are lower than the likely returns

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Definitions:

Outside Relationships

Interactions or associations that occur beyond primary or significant personal connections, such as those with acquaintances or societal links.

Confucianism

an ethical and philosophical system based on the teachings of the Chinese philosopher Confucius, emphasizing moral integrity, familial loyalty, and respect for social hierarchies.

Patriarchal

Relating to a social system in which men hold primary power and predominate in roles of political leadership, moral authority, social privilege, and control of property.

Egalitarian Relationship

A partnership where both individuals have equal rights, responsibilities, and opportunities, without any discrimination based on gender, race, or other characteristics.