The Principal-Agent Problem Means That Managers Must

question 77

Multiple Choice

The principal-agent problem means that managers must

• A) find ways for managers to get people to buy stock in their company.
• B) devise compensation rules to induce principals to act in the best interest of agents.
• C) devise compensation rules to induce agents to act in the best interest of principals.
• D) find efficient agents who will negotiate fair compensation rules for a firm's principal managers.

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Definitions:

Nonfamily Household

Living arrangements where individuals reside alone or with people to whom they are not related by blood, marriage, or adoption.

Children

are young human beings who are not yet fully mature, typically characterized by a stage of development that precedes adolescence and adulthood.

Marrying

The legal or formal joining of two people as partners in a personal relationship, recognized and sanctioned by law or cultural practice.

Fewer Children

A situation or trend where there is a reduction in the number of children within a family, society, or demographic group.