Which of the following is generally used to solve agency problems?
A) self-dealing
B) stock-based compensation schemes
C) a highly centralized organization structure
D) a matrix organization structure

Question

Quizplus · Accepted Answer

Stock-based compensation schemes are generally used to solve agency problems as they align the interests of the agents with those of the principal by providing incentives for the agents to act in the best interests of the company and its shareholders. Self-dealing creates agency problems by encouraging agents to prioritize their own interests over those of the principal. A highly centralized organization structure may help to reduce agency problems by allowing for greater control and oversight, but it may also limit flexibility and innovation. A matrix organization structure is designed to balance the needs of different parts of the organization, but it may also create confusion and diffuse accountability. Therefore, the best choice is B.

Which of the Following Is Generally Used to Solve Agency