One Reason for the Existence of Agency Problems Between Managers

question 46

Multiple Choice

One reason for the existence of agency problems between managers and shareholders is that:

• A) there is a separation of ownership and control of the company.
• B) managers know how to manage the company better than shareholders.
• C) shareholders have unreasonable expectations about managerial performance.
• D) none of the above

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Definitions:

Procedural Flexibility

The ability to adapt the rules and processes in a system, such as in legal proceedings or organizational policies, to accommodate different circumstances.

Wage Flexibility

The ability of wages to adjust in response to changes in the economic environment, including supply and demand for labor.

Forcing Strategy

A negotiation approach where one party uses aggressive tactics to dominate or coerce the other into agreement, often leading to a win-lose outcome.

Concessions

Compromises made by employers or employees during negotiations, such as wage reductions or benefit increases, to reach an agreement.