The principle-agent problem:

prevents managers from exercising their best managerial judgement

describes the inability of lenders to discern between good and bad credits.

is completely solved by venture capital firms and their approaches to financing firms.

can be solved by due diligence before providing funding.

None of the other answers.

Expert Solution

The principal agent problem is a problem between the shareholders and the managers of the company in which manager is working in his own interest so,the principal agent problem will be preventing the managers from exercising their best managerial judgement as they will be either trying to work for their own interest or work for the interest of shareholders but they are not going to work for the interest for organisation in long run.

Correct answer is option (A) prevent manager from exercising their best managerial judgement

jeff jeffy answered 2 years ago

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