The agency problem that can occur between managers and shareholders is sometimes solved by performing ________.
A) audits
B) mergers or acquisitions
C) incentive alignment
D) restructuring

Question

Quizplus · Accepted Answer

Incentive alignment is a way to align the interests of managers and shareholders by offering incentives to managers that are tied to the performance of the company. This helps to ensure that managers are motivated to act in the best interests of shareholders. Audits, mergers or acquisitions, and restructuring are not specifically designed to solve the agency problem between managers and shareholders.

The Agency Problem That Can Occur Between Managers and Shareholders