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33 There is a tendency for CEOs of larger companies to earn more money than CEOs of smaller companies. Suppose a CEO decides to acquire

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33 There is a tendency for CEOs of larger companies to earn more money than CEOs of smaller companies. Suppose a CEO decides to acquire another company, thus increasing the size of the CEO's firm. Suppose also that the price of the stock of the acquiring firm falls when it learns of the upcoming acquisition. This appears to be an example of the principal-agent problem a CEO pursuing profit maximization rather than wealth maximization a CEO behaving unethically the general principal that acquisitions are generally not good Investments

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