How is the separation of ownership from control related to the principal-agent problem?
What will be an ideal response?
The principal-agent problem results when an agent pursues his own interests rather than the interests of the principal who hired him. This can be a problem for a corporation because the managers of a firm (the agents) may choose to pursue policies that benefit themselves rather than the firm's stockholders (the principals). Stockholders would benefit from a policy that yields higher profits but managers may consider the policy too risky and prefer to take fewer risks even at the expense of possible future profits. Because most shareholders are divorced from the daily operation of the firm they may be unaware of the choices managers make.
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A price discriminating monopolist charges lower prices to customers with
A) lower supply elasticities. B) higher supply elasticities. C) lower willingness to pay. D) higher willingness to pay.
When the government increases its borrowing, the budget _____ increases and government debt _____. The resulting change in investment due to this increased government borrowing is called _____
Fill in the blank(s) with correct word