Describe why publicly-held firms have agency problem

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Reference no: EM132133761

1) Describe why publicly-held firms have an "agency problem."

Agency problems exists when the interest of the individuals that act as agents to manage the company, that may not align with the interest of the firms stockholders. Publicly held firms typically have agency problems due to conflicts on interest with people on the board including the companies stockholders and management..... Not quite sure what to add here...

2) Identify the main mechanism used to deal with the agency problem.

3) How are boards of directors composed? What (allegedly) makes boards more independent? What makes boards less independent?

4) How are CEOs compensated in order to reduce the agency problem?

Reference no: EM132133761

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