Corporate Governance Fundamentals Quiz
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Questions and Answers

What problem arises when an agent acts on behalf of a principal?

  • Moral Hazard (correct)
  • Insufficient effort
  • Transparency issue
  • Entrenchment

    • What is an example of entrenchment as part of the agency problem?

  • Insufficient effort
  • Self-dealing
  • Lack of transparency
  • Extravagant investment (correct)

    • How can the principal-agent problem be mitigated?

  • Ethical guidelines
  • Strict regulations
  • Increased compensation
  • Complete contracts (correct)

    • What may be in the interest of the agent to do once a contract is signed?

    <p>Behave badly</p> Signup and view all the answers

    What is the primary cause of the agency problem?

    <p>Different interests between principal and agent</p> Signup and view all the answers

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