The Principal-Agent Problem Is More Serious in Large Firms Than

question 170

Multiple Choice

The principal-agent problem is more serious in large firms than in small firms because

• A)monitoring employee activity in large firms is generally more difficult.
• B)employees in large firms have less information.
• C)profits increase with the size of the firm.
• D)customers expect better treatment from small firms and they usually get it.

Identify and describe different types of corporations, including closely held corporations.

Analyze dividend policies and their impact on company growth and shareholder value.

Understand the calculation of required returns on stock using dividend forecasts and growth models.

Understand the significance of preemptive rights and its implications for shareholder value.

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