Which of the following is not a characteristic of principal-agent conflicts that often exist in a firm? Firms can usually find solutions that reduce agency costs without increasing monitoring or incentive costs. Managers do not always operate in the best interest of owners because managers care about the noncash benefits of their jobs. Managers generally have a shorter time horizon than owners; thus, managers do not fully take into account the future long-run profitability of the firm.

Which of the following is not a characteristic of principal-agent conflicts that often exist in a firm? Firms can usually find solutions that reduce agency costs without increasing monitoring or incentive costs. Managers do not always operate in the best interest of owners because managers care about the noncash benefits of their jobs. Managers generally have a shorter time horizon than owners; thus, managers do not fully take into account the future long-run profitability of the firm.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter21: Getting Employees To Work In The Firm’s Best Interests

Section: Chapter Questions

Problem 21.3IP

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