Corporate Control Mechanisms

Multiple Choice

Corporate control mechanisms

A) can make it easier to detect hidden actions by managers.
B) will exacerbate moral hazard problems when complete contracts are effectively solving the principal-agent problem.
C) may not be important when corporate takeovers effectively impose external forces to ensure managerial decisions are value-maximizing.
D) make it impossible for managers to take hidden actions that are harmful to the interests of the firm's owners.
E) both a and b