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.

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Definitions:

Similar Techniques

Methods or procedures that share common characteristics or outcomes, often used interchangeably or in combination to achieve a specific goal.

Reinforce Correct

A learning strategy that involves strengthening desired behaviors or responses through positive reinforcement techniques.

Job Instruction

A structured method of training where an individual is taught how to perform their job effectively and efficiently through step-by-step instructions.

Successful Job

A role where the individual achieves set objectives, feels engaged and satisfied, and contributes positively to the organization's goals.