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I need to answer these questions concerning Agency Issues. Agency Issues. Company A pays its managers a fixed salary. Company B ties compensation to the

I need to answer these questions concerning Agency Issues.

Agency Issues. Company A pays its managers a fixed salary. Company B ties compensation to the performance of the stock.

a. Which company's compensation would most mitigate conflicts of interest between managers and shareholders? Why?

b. Other things equal, which company would experience the greatest variations of earnings? Why?

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