Which of the Following Is a Conclusion of Agency Theory

question 13

Multiple Choice

Which of the following is a conclusion of agency theory?

• A) Managers may accept excessive financial risks to increase the returns to shareholders.
• B) Managers tend to avoid high-risk, high-return investments that may jeopardize their positions if successful.
• C) Managers will always use the least expensive source of funds to finance investments.
• D) Managers will tend to put the stockholders interests before their own security and ambitions.

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Definitions:

Policies

Formal guidelines or rules that govern the operations and decision-making processes within organizations.

Procedures

Established methods or steps for carrying out tasks or operations, often detailed in official documentation to ensure consistency and high performance.

Participatives

Individuals who actively take part or engage in activities, often contributing to group decision-making or collaborative efforts.

Respecting Traditions

Acknowledging and valuing the customs and beliefs that have been passed down through generations.