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lutik1710 [3]
3 years ago
13

What is interdependance

Biology
1 answer:
dimulka [17.4K]3 years ago
7 0

interdependance can be defined as dependance upon each other...

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Explain in details the agency problem
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Agency problem

Agency problem also known as agency costs occurs in a two-party relationship (principal/agent) where the agent is expected to act or make decisions for the good of the principal.

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Causes of conflicts between managers and stockholders may include;

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Manipulation of accounting systems- to reflect high profits.

Unnecessary perks management award themselves.

Solution to these problems include threat for firing in case of poor performance, shareholders may also threaten to sell the company, remuneration based on performance, incurring agency costs-these are costs incurred while hiring external auditors, setting a control system, legal costs for employment letters and contracts.

 

Agency problem may be reduced by motivating the manager to act for the companies best interest by offering incentives

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