The Problems That May Arise Due to the Separation of Ownership

question 18

Multiple Choice

The problems that may arise due to the separation of ownership and management in large business organizations are known as:

• A) separation anxiety.
• B) the agency problem.
• C) corporate disconnect theory.
• D) none of the above

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Definitions:

Shirking

The action of avoiding or escaping from work or duties.

Monitoring Costs

Expenses involved in overseeing and controlling the performance of a business or investment.

CEO's Pay

The compensation package, including salary, bonuses, and benefits, provided to the Chief Executive Officer of a company.

Above-Equilibrium Wage Rate

A situation where the wage for a job is set higher than the market equilibrium, typically leading to surplus labor supply.