Question

List and discribe three of action that a firm's stockholders can take to manage the modern agency problem?

Answer 1

Three actions that firm stockholder can take to manage the modern agency problem are as follows-

A. Model agency problem can be resolved by the stakeholder through management of a better transparent channel through which information gap can be reduced between management and shareholders and which will eventually eliminate the agency problems.

B. Modern agency problem can also be resolved through announcement of performance related payments to the managers which will be helpful in motivating them through performance of Haier standards and which will be in their own interest.

C. Providing the manager with stock incentive can be another step which can be taken by stockholders which will be helpful for management because it will offer them with better compensation and ownership in company.

These three action firm stockholder can take in order to reduce the agency conflicts and manage the modern agencyagency problems.