5 Questions
What problem arises when an agent acts on behalf of a principal?
Moral Hazard
What is an example of entrenchment as part of the agency problem?
Extravagant investment
How can the principal-agent problem be mitigated?
Complete contracts
What may be in the interest of the agent to do once a contract is signed?
Behave badly
What is the primary cause of the agency problem?
Different interests between principal and agent
Test your knowledge of corporate governance and social responsibility with this quiz on the fundamentals of corporate governance, including the agency problem and its implications. Challenge yourself to understand the key concepts essential for effective corporate governance and restructuring.
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