What Is the Most Common Way That Principal-Agent Problems Are

question 84

Multiple Choice

What is the most common way that principal-agent 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 those of the company
• 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
• E)by paying the managers high salaries to encourage them to act in the company's interests.

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Definitions:

Actin

A globular protein that forms filaments, which are vital components of the cytoskeleton in all eukaryotic cells, involved in cell movement and structure.

Cross Bridge

A myosin projection on a muscle cell that connects with actin to contract muscle fibers, fundamental in muscle contraction.

Opposite Direction

Referring to a movement, orientation, or action that is directly contrary or reverse to another.

Creatine Phosphate

A high-energy reserve molecule in muscles and the brain that donates phosphate to ADP to regenerate ATP during the first seconds of intense work.