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From course:

Economics A Level (DONEEEEEEE)

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Question:

How can Owners use Accountability and Incentives to retain Control of the Firm

Author: eric_galvao



Answer:

-How Accountable the Agent is to the principal can lead to how easy it can be for the principal to deal with the Problem -Shareholders can Remove Directors with a Vote, but they usually lack Information to do such -Accountability ensures the Agent must be clear with their own Intentions and Aims. -Owners may also offer Incentives to ensure that the Agent acts accordingly. For example, a Bonus if a certain Profit is Achieved.


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