Explain the principal–agent problem in business
Please provide the best answer for the statement.
Large corporations are typically run by company executives or managers (agents) whose interest may not be aligned with those of the company shareholders or owners (principals). The managers may make decisions or allocate funds that make their lives more rewarding and enjoyable such as spending money on lavish offices or perks, but that do not enrich the shareholders. The solution to this problem is to find ways so that the interests of the managers (agents) are aligned or similar to those of the owners (principals).
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Rent seeking
A) is unlikely the more heavily engaged government planners are with the economy. B) is more likely where institutions are strong. C) is not likely to lead to waste and efficiency. D) is more likely when government policy creates something of value that government officials are charged with distributing.
Promoting from Within Like most fast food restaurants, Chipotle has a high rate of employee turnover. However, for Chipotle, this occurred not only at the entry-level, server jobs, but also at the shift supervisor, store manager, and area manager
levels. Why did their enactment of a policy of exclusively promoting from within the organization reduce their turnover problem in these supervisory roles?