Which of the Following Is an Example of the Agency

question 9

Multiple Choice

Which of the following is an example of the agency problem?

• A)Managers always invest in projects that have appropriate returns and that will increase shareholder wealth.
• B)Managers resign when they believe they have not always acted in the best interests of shareholders.
• C)Managers conduct an acquisition program purely to increase the size of an organisation.
• D)Managers do not look for new projects as they want to avoid business risk.
• E)Both C and D are examples of the agency problem.

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Definitions:

Upfront Advice

Preliminary guidance or recommendations provided before entering into a transaction or making a decision, often involving financial or legal matters.

Database Access

The ability or permission to retrieve and manipulate data from a database system.

IFRIC 13

International Financial Reporting Interpretations Committee pronouncement 13, providing guidance on customer loyalty programs and the accounting treatment for award credits.

Customer Loyalty Programme

A customer loyalty program is a rewards program offered by a company to customers who frequently make purchases, designed to enhance customer retention by offering incentives.