What Is the Most Common Way That Agency Conflict Problems

question 79

Multiple Choice

What is the most common way that agency conflict problems are addressed in most corporations?

• A)by minimizing the number of decisions that a manager makes where there is a conflict between the managers interests and those of the shareholders
• B)by terminating the employment of employees who are found to have put their own interests above that of the company's
• C)by using disinterested outside bodies to adjudicate between managers and shareholders when such conflicts arise
• D)by prosecuting managers who have been found to have illegally used company moneys for their own benefit

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Definitions:

Depreciation

The accounting process of allocating the cost of tangible assets over their useful lives, reflecting the reduction in value over time.

Working Capital

The difference between a company's current assets and current liabilities, indicating the amount of liquid assets the company has available to build its business.

Net Investment

The total amount spent by a company on acquiring new assets, after subtracting disposals, intended to enhance the business’s earning capacity.

Plant Expansion

Plant expansion involves the process of enlarging a company's physical facilities, such as manufacturing plants or service centers, aiming to increase production capacity or operational efficiency.