One Way to Correct a Potential Principal-Agent Problem Is for Stockholders

Multiple Choice

One way to correct a potential principal-agent problem is for stockholders to

A) offer managers "golden parachutes" in the event of a takeover.
B) empower managers to make the decisions they feel are best.
C) ensure that there is no explicit linkage between managers' compensation and the profitability of the firm.
D) All of these answers are correct.