Agency Theory Says That the Principal Must Choose a Contracting

question 24

Multiple Choice

Agency theory says that the principal must choose a contracting scheme that _____.

• A)is not based on compensation systems such as merit pay
• B)helps the agent maximize his/her benefits
• C)provides complete autonomy to the agent
• D)does not offer outcome-oriented compensation to agents
• E)helps align the agent's interests with the principal's interests

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Definitions:

Charisma

a magnetic personality trait or quality that can inspire enthusiasm and devotion in others, often leading to influential leadership.

Relations-oriented Leadership

A leadership approach that emphasizes building strong interpersonal connections, prioritizing team cohesion and individual well-being within the group.

Employee-centered Behavior

A management approach that places emphasis on the welfare, needs, and involvement of employees, rather than solely focusing on productivity and efficiency.

Leader Style

The characteristic approach and methods used by a leader in directing, motivating, and managing teams and individuals.