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In a corporate governance context of a widely held large corporation, principals often use incentives and monitoring to guard against the principal-agent problem. Required: a)
In a corporate governance context of a widely held large corporation, principals often use incentives and monitoring to guard against the principal-agent problem.
Required:
a) Discuss the principal-agent problem, and identify who the principal is and who the agent is. (3 marks)
b) Identify and discuss two key assumptions of agency theory. (2 marks)
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