The Principal-Agent Problem

question 78

Multiple Choice

The principal-agent problem

• A)occurs when managers have more incentive to maximize profits than the stockholders-owners do.
• B)in financial markets helps to explain why equity is a relatively important source of finance for American business.
• C)would not arise if the owners of the firm had complete information about the activities of the managers.
• D)explains why direct finance is more important than indirect finance as a source of business finance.

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Definitions:

Communication Efforts

The deliberate actions taken to convey information, ideas, or feelings to others, using various methods or channels to achieve effective communication.

Monitoring The Conversation

The practice of observing and analyzing discussions, especially on social media, to gauge public opinion or sentiment.

Corporate Communicators

Professionals responsible for managing and facilitating internal and external communication within a corporation.

Crisis

A critical or tumultuous situation that requires immediate attention and action to manage and mitigate its effects.