level: Level 1
Questions and Answers List
level questions: Level 1
| Question | Answer |
|---|---|
| External Controls | are market driven |
| Internal Controls | revolve around executive compensation |
| Principal - Agent problem | when there is a conflict of interest between the principal and the agent |
| Agent | a person or entity that represents the interest of another party (managers and executives) |
| Principal | a rule or entity that is first ranked in importance or level of ownership (shareholders) |
| Monitoring | the constant flow of information so that shareholders are able to view the current state of a corporation. mechanisms are in place to oversee managers and evaluate their performance |
| Corporate Governance | controls put in place to ensure that a corporation is running in a ethical, legal, and and transparent manner that is in the best interest of the shareholders |