In Which of the Following Cases Will the Agency Problem

question 4

Multiple Choice

In which of the following cases will the agency problem between shareholders and managers be the greatest?

• A) 100% of the common stock is owned by the founder of the company who decided to retire and hired a manager to run his business for him.
• B) The Johnson family owns 50% of the common stock of the company. The other 50% is owned by 5 mutual funds.
• C) The common stock of the company is owned by many diverse shareholders, with no shareholder owning more than 1% of the outstanding stock.
• D) All top managers in the company own significant amounts of stock and stock options.

Understand the concepts of Theory X and Theory Y management and their relevance to empowerment.

Grasp the significance of leadership in environments requiring high levels of creativity and innovation.

Understand the process and benefits of implementing employee empowerment strategies.

Learn the role and impact of knowledge workers in the contemporary workplace.