One of the Characteristics of a Principal-Agent Relationship Is

question 17

Multiple Choice

One of the characteristics of a principal-agent relationship is:

• A)The owners of the company are not involved in the daily management of the company.
• B)The owners of the company hire an auditor to run the company for them and to make daily decisions for the company.
• C)The owners have more knowledge than management about the daily operations of the company.
• D)Outsiders benefit when a manager is hired by owners to protect their interests in the company because the information available to outsiders is more likely to correspond to financial accounting standards.

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Definitions:

Pupils Dilation

The widening of the pupils, which can be a response to low light conditions, psychological arousal, or certain emotions.

Galvanic Skin Response (GSR)

A physiological reaction that results in the variation of the electrical conductance of the skin, often used as an indicator of emotional arousal.

Parental Investment

The time and energy parents expend for their offspring’s benefit, including protection, feeding, and teaching.

Electrical Conductivity

A measure of a material's ability to conduct an electric current.