Managerial reputation is an <u>External </u> incentive that helps to mitigate the <u>Owner-manager </u> principal-agent problem.
Explanation:
<u>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. </u>
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
<u>Monetary incentives means to reward the workers for their performance and productivity through money. </u>
<u>Monetary incentives also include employee stock options, profit sharing plans, paid time off, bonuses and cash awards.</u>
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<u>So we can say that </u>
Managerial reputation is an <u>External </u> incentive that helps to mitigate the <u>Owner-manager </u> principal-agent problem.