Why is agency problem and what costs to firm might result

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Problem 1: Explain why each of the following situations is an agency problem and what costs to the firm might result from it. Suggest how the problem might be dealt with short of firing the? individual(s) involved.

The front desk receptionist routinely takes an extra 20 minutes of lunchtime to run personal errands.

Division managers are padding cost estimates to show? short-term efficiency gains when the costs come in lower than the estimates.

The? firm's chief executive officer has had secret talks with a competitor about the possibility of a merger in which she would become the CEO of the combined firms.

A branch manager lays off experienced? full-time employees and staffs customer service positions with? part-time or temporary workers to lower employment costs and raise this? year's branch profit. The? manager's bonus is based on profitability.

Reference no: EM133002584

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