Identify a Way in Which Principals Usually Salvage Their Businesses

question 56

Multiple Choice

Identify a way in which principals usually salvage their businesses from agency problems that destroy value.

• A)They make investments in blue ocean strategies.
• B)They get greenfield investments in equipment or knowledge.
• C)They monitor their manager-agents through the board of directors.
• D)They reduce the compensation and incentives of their manager-agents.

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Definitions:

Endorser

One who issues an endorsement.

Instrument

A formal written document effecting legal rights or obligations, such as a contract or financial document.

Dishonored

A term referring to a financial instrument, such as a check, that has been presented for payment but refused by the bank or payer.

Commercially Reasonable

Actions that a prudent individual or entity would take in a commercial context, considering the circumstances reasonably expected in such a situation.