Question

Which of the following is not a way in which agency problems can be reduced through corporate control?

a.executive compensation.
b. threat of hostile takeover.
c.acquisition of a foreign subsidiary.
d.monitoring by large shareholders.

Answer 1

The correct answer is c. acquisition of a foreign subsidiary.

Step-by-step explanation:

The correct answer is c. acquisition of a foreign subsidiary.

Agency problems refer to conflicts of interest that arise between the principals (shareholders) and the agents (managers) in a corporation. These problems can be reduced through corporate control mechanisms such as executive compensation, the threat of hostile takeover, and monitoring by large shareholders.

However, the acquisition of a foreign subsidiary does not directly address agency problems or provide a mechanism for reducing them. Instead, acquiring a foreign subsidiary may introduce new challenges and complexities in corporate governance and control.