How Can a Corporation's Board of Directors and Its Managers

question 35

Essay

How can a corporation's board of directors and its managers try to reduce the principal-agent problem?

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Definitions:

Dividends

Payments made by a corporation to its shareholders, typically from profits, as a distribution of earnings.

Required Return

The minimum expected return an investor demands for holding a particularly risky investment.

Growth Rate

The rate at which a company's sales, revenue, or other financial metrics increase over a specific period.

Annual Dividend

The total dividend payment a shareholder receives from a company in one fiscal year.