If High-Level Executives of a Company Award Themselves Sizable Bonuses

Multiple Choice

If high-level executives of a company award themselves sizable bonuses even though the firm they manage is making losses and performing poorly, this event is most likely to arise because of

A) the law of diminishing marginal returns.
B) competition among business firms for high-level executives.
C) economies of scale.
D) the principal-agent problem.