What Is the Main Way in Which Firms Follow the Owner-

Multiple Choice

What is the main way in which firms follow the owner- control argument and distribute a high proportion of earnings, and so reduce the principal- agent problem?

A) Owners can sell shares if they feel managers are adopting a high dividend policy.
B) Managers have control over investment and so can act in the firm's best interests.
C) Owners have control over day- to- day running of the firm.
D) Managers have to ask for investment funds; this subjects their plans to scrutiny.