True/ False - Agency problem 1) Can be reduced by giving managers salaries that are fixed....

True/ False

- Agency problem

1) Can be reduced by giving managers salaries that are fixed.

2) Result from the separation of the board of directors and management.

3) Cause shareholders to want managers to maximize profits.

4) May interfere with the goal of maximizing shareholder wealth.

Expert Solution

1. FALSE- Agency problem cannot be reduced by providing with the salaries which are fixed, because they should be continuously hiked.

2. TRUE- Agency problem arise from separation of ownership and Management

3. FALSE- agency problem will be causing the conflict of interest between shareholders and Management

4. TRUE- agency problem is interfering with the goal of maximization of the shareholders profit.

jeff jeffy answered 2 years ago

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