Question

Managerial reputation is an _____ incentive that helps to mitigate the _______ principal-agent problem. Multiple Choice

Answer 1

Managerial reputation is an External incentive that helps to mitigate the Owner-manager principal-agent problem.

Explanation:

The theory of incentive  propose that the  behavior of an individual  is motivated by the “pull” of external goals, such as rewards, money, or recognition.

In many situations in which a particular goal, such as a promotion at work, can serve as an external incentive that helps activate particular behaviors in an employee

Monetary incentives means to  reward the workers for their  performance and productivity through money.

Monetary incentives also  include employee stock options, profit sharing plans, paid time off, bonuses and cash awards.

So we can say that

Managerial reputation is an External incentive that helps to mitigate the Owner-manager principal-agent problem.