Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
4th Edition
ISBN: 9780134083278
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Chapter 1.2, Problem 2CC
Summary Introduction

To Determine: The principal agent problem that exists in corporations.

Introduction: The principal-agent problem occurs when the main delegates an activity to another agent, yet the principal does not have the complete idea about how the agent would act. Besides, the interests of the principal wander from that of the agent, implying that the result is less alluring than the principal anticipates.

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