The Purpose of Governance Mechanisms in Corporations Is To

question 2

Multiple Choice

The purpose of governance mechanisms in corporations is to:

• A)centralize company resources to the top management.
• B)reduce the scope and frequency of the agency problems.
• C)satisfy the requirements of the Securities and Exchange Commission (SEC).
• D)limit corporate growth to manageable rates.
• E)monitor the performance of the board of directors.

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Definitions:

Management Overhead Costs

Expenses related to the administration and general operations of a business that are not directly tied to specific project activities or production.

Mechanistic Design

An organization structure that is centralized, with many rules and procedures, a clear-cut division of labour, narrow spans of control, and formal coordination.

Decentralization

The distribution of administrative powers or functions across various levels and departments within an organization, promoting autonomy and flexibility.

Wider Spans Of Control

A management principle whereby a manager supervises a larger number of subordinates, which can lead to more autonomy but also requires more efficient communication.