90.2K

Verified Solution

Link Copied!

Daniel owns Daniel's Tantalizing Tees, a T-shirt shop in a small college town in Kansas. With a staff of three part-time employees, Daniel operates the business in accordance with his personal goals, dreams, and capabilities. Does Daniel have an agency conflict to deal with? No, as both the owner and operator of Daniel's Tantalizing Tees, Daniel has not created the necessary agency relationship through which an agency conflict can exist. Yes; as both the owner and operator of Daniel's Tantalizing Tees, Daniel has created the necessary agency relationship through which an agency conflict can exist. Yes; there is always an inherent conflict of interest between owners and operators (managers). No; by having part-time, as opposed to full-time, employees, Daniel is prevented from experiencing an agency conflict. Which of the following actions will help ease agency conflicts and better align managers' objectives with the firm's shareholder wealth? Pay the manager a large base salary with a huge stock option package that matures on a single date. Pay the manager a combination of salary and stock options (phased in over several years) that reward him or her for consistently increasing shareholder wealth True or False A small number of institutional investors are often able and motivated to bring direct shareholder pressure on a firm's management in an effort to reduce potential agency conflicts. No; as both the owner and operator of Daniel's Tantalizing Tees, Daniel has not created the necessary agency relationship through whit an agency conflict can exist. Yes; as both the owner and operator of Daniel's Tantalizing Tees, Daniel has created the necessary agency relationship through which ar agency conflict can exist. Yes, there is always an inherent conflict of interest between owners and operators (managers). No; by having part-time, as opposed to full-time, employees, Daniel is prevented from experiencing an agency conflict. Which of the following actions will help ease agency conflicts and better align managers' objectives with the firm's shareholder wealth? Pay the manager a large base salary with a puge stock option package that matures on a single date Pay the manager a combination of salary and stock options (phased in over several years) that reward him or her for consistently increasing shareholder wealth True or False: A small number of institutional investors are often able and motivated to bring direct shareholder pressure on a firm's management in an effort to reduce potential agency conflicts. True False

Answer & Explanation Solved by verified expert

See Answer