Which of the Following Management Actions Reflects Agency Problems Due

question 2

Multiple Choice

Which of the following management actions reflects agency problems due to the fact that information held by the agent is hard to observe?

• A)Enriching managers themselves even if shareholders do not benefit
• B)Avoiding risky strategic initiatives even if shareholders view them as "reasonable"
• C)Paying for services that seem excessive to the shareholders
• D)Pumping up the firm's short-run performance even if shareholders are harmed in the long-run
• E)Giving work a mediocre effort so managers do not have to work excessive hours

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Definitions:

Organisational Loyalty

The level of commitment an individual has towards their organization, often reflecting in their willingness to stay with and support the organization.

Work Commitment

A measure of how much dedication and loyalty an individual has towards their job or profession.

Psychological Contract

The set of expectations held by an individual about working relationships with the organisation.

Exchange of Values

Refers to the process where goods, services, or ideas are traded between individuals or entities, each perceiving value in the exchange.