Economics (AS & A Level) · Oct / Nov 2023 · Paper 33 · Question 3
9708Growth and survival of firms
What is most likely to increase the principal–agent problem?
- Aensuring the actions of agents are known by the managers
- Blinking the rewards of managers with the profitability of the firm
- Cremoving from managers the opportunity to hold shares
- Dpreparing contracts that compel agents to work in the interest of the principal
As printed in the paper
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Correct answer: C. removing from managers the opportunity to hold shares
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