Why is a manager with a small ownership interest in the firm more likely to indulge in wasteful behavior?Multiple choice question.The manager with a small ownership interest has a longer tenure with the firm.The manager bears only a small fraction of the costs but enjoys all the benefits.The manager with a small ownership interest is not monitored by the firm.The manager bears a large fraction of the costs but enjoys an insignificant portion of the benefits.

Who is more likely to indulge in wasteful behavior?Multiple choice question.A manager with a large ownership interest in the firmA manager with a small ownership interest in the firm

An agency problem can be alleviated:a.when a firm is a sole proprietorship.b.by compensating managers in such a way that acting in the best interest of shareholders is also in the best interest of managers.c.by asking managers to take on more risk than they are comfortable taking.d.a) and b)e.a), b), and c)

Because managers make major decisions, they have limited opportunity to influence the ethical tone of the firm.TrueFalse

Which of the following is not identified as one of the major problems that can arise in owner-manager agency relationships?Group of answer choicesRisk aversion.Horizon problems.Reduced incentives.Dividend retention.

Why are managers likely to work harder after an LBO?Multiple choice question.The managers have borrowed from the firm.The managers are legally required to work harder.The managers are more accountable to the shareholders after an LBO.The managers have a greater ownership interest.