Question
Agency theory tells us that there is a conflict of interest between managers and owners (or Investors). Managers have an incentive to increase their own
Agency theory tells us that there is a conflict of interest between managers and owners (or Investors). Managers have an incentive to increase their own wealth,but don't have a strong motive to increase firm value in general. Which of the following items are NOT an effective way to reduce the agency cost?
faithful representation to reduce information asymmetry between managers and investors
Providing equity-based bonus for managers toalign their interests with investors' interests
Creating a new regulation to improve corporate governance like SOX
NONE
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