To Avoid the Agency Problem, Managers Should Take Actions

question 39

Multiple Choice

To avoid the agency problem, managers should take actions:

• A) Which adds value to the firm.
• B) Only after the president has approved them.
• C) Only if they increase the market share of the firm.
• D) Which add to the size of the firm's workforce.
• E) Only if management jobs will not be jeopardized.

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Definitions:

Defensive Mergers

Mergers undertaken by companies to protect against potential threats, improve market position, or mitigate weaknesses.

Shareholders' Wealth

Refers to the overall value of the shares an investor holds in a company, which increases as the company's value goes up.

Government Policies

Strategies and measures adopted by a government to regulate, guide, and control activities within its jurisdiction, affecting economic, social, and administrative spheres.

Managers' Actions

Decisions and activities undertaken by the management of a company to achieve its objectives.