What Can Be Done to Deal with the Principal-Agent Problem

question 250

Multiple Choice

What can be done to deal with the principal-agent problem?

• A)threaten to liquidate the firm
• B)link top manager salaries to the profits of the firm or the price of the firm's stock
• C)have the CEO be a rotating position
• D)forbid managers from owning any company stock

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Definitions:

Taney's Arguments

Refer to the judicial opinions and reasoning of Roger B. Taney, the fifth Chief Justice of the United States, particularly associated with the Dred Scott v. Sandford case which denied citizenship to African Americans.

Nature of Citizenship

Refers to the relationship between an individual and a state in which the individual owes allegiance to the state and in turn is entitled to its protection and the rights and responsibilities defined by the state's law.

Congressional Races

Contests for election to the United States Congress, comprising both the House of Representatives and the Senate, with candidates vying to represent specific geographic districts or states.