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.
Question
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.
Solution
The question is asking which of the given options is not considered a major problem that can occur in owner-manager agency relationships.
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Risk aversion: This is a problem in agency relationships. Managers may avoid taking risks to protect their jobs, even if the risk could potentially benefit the owners.
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Horizon problems: This is also a problem. Managers may not make long-term investments that would benefit the owners because they are more concerned with short-term results.
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Reduced incentives: This is another problem. If managers do not have enough incentives, they may not work as hard or be as motivated to make the company successful.
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Dividend retention: This is not typically identified as a major problem in owner-manager agency relationships. While managers may prefer to retain earnings for growth, and this could potentially cause disagreements with owners who prefer dividends, it is not generally classified as a major agency problem.
So, the answer is Dividend retention.
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