Highlight the various measures that would minimize agency problems between the owners and the management.

CPA-Financial-Management-Section-3 Revision kit
  • Use of performance based reward/compensation –
  • Threats of firing
  • Contractual based employment
  • Introduction of share ownership plans for employees
  • Incurring agency costs or monitoring costs to avoid or minimize agency problem – e.g audit fees.
  • Threat of takeover

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