Question 1: Describe a principal-agent
relationship.
a. a principal makes a decision that affects an agent
b. an agent makes a decision that affects a principal
c. an employee acting on behalf of its employer can be viewed as
an agent
d. a lawyer acting on behalf of its client can be viewed as a
principal
e. A and B
f. A and C
g. A and D
h. B and C
i. B and D
j. C and D...
What does the principal agent problem refer to,
and what is an example of it? In your example,
what
is something that the agent might do that would
con
flict with the goals of the principal? What
actions
could the principal take to try to prevent (or at
l
east reduce) this problem
5. What does the principal agent problem refer to,and what is an
example of it? In your example, what is something that the agent
might do that would conflict with the goals of the principal? What
actionscould the principal take to try to prevent (or at least
reduce) this problem?
The Principal-Agent Problem: Determine which is the principal
and which is the agent in the following relationships and then
briefly discuss the principal-agent issues for each.a. A firm that produces good for export and the export
management company that helps market its goods overseasb. An employee-pension management firm and the company using its
servicesc. The management of a firm and its stockholders
Opportunistic and overoptimistic behavior transforms the
principal-agent relationship between investor and entrepreneur into
a principal-agent problem.’ Explain why the above statement is true
and outline the mechanisms which are available to both parties to
reduce this problem.
Agency is a contractual relationship, involving an agent and a
principal, in which the agent is given the authority to represent
the principal in dealings with third parties. The most common
example is an employer-employee relationship wherein an agent
(employee) is given the power by a principal (employer) to act on
his or her behalf. An agent may be an employee or an independent
contractor. A principal is a person who employs an agent to act on
his or her...
Describe the differences between principal–agent conflicts and
principal–principal conflicts. What kind of corporate governance
reforms can be introduced to protect the shareholders’ interest,
particularly minority shareholders?
In a principal-agent relationship, the parties have agreed that
the agent will act...
on behalf of a customer.
in the agent's best interest.
as a fiduciary for the government.
as a fiduciary of the principal subject to the principal's
control and consent.