Economic

Chapter 1: Applied problems, 4, 5, and 6, pages 32-33, and Mathematical Exercise #2, page 35. 4. explain why it would cost Rafael Nadal or Venus Williams oft than than to chip in the professional tennis tour and open a tennis shop than it would for the coach of a university tennis team to do. I would eat up to say that one cost of opening a tennis shop is the opportunity cost of labor or the forgone salary of other job options. Because Nadals or Williams asleep(p) income is much higher than that of a university coach, their opportunity cost is higher. 5. An article in the Wall Street Journal discusses a trend among whatsoever large US Corporation to base the remuneration of after-school(prenominal) members of their boards of directors partly on the functioning of the corporation. This growing cause more than well-nigh aligns the director to the company. (Some) companies link certain hackneyed or stock-option grants for directors to improved financial perfo rmance, using a bar such(prenominal) as annual return on equity. How would such a gene gene linkage tend to depress the delegation problems mingled with managers and stockholders as a completely? Why would directors be more efficient than shareholders at change managerial performance and changing their incentives?

How would such a linkage tend to reduce the agency problems between managers and shareholders as a whole? Such a linkage skunk reduce the agency problem because it more closely ties the directors individually efficient treat with aggregate surplus; that is, the boilersuit most efficient outcome , and optimum performance of the corporation! . This means that the shareholders preferred outcome will more closely resemble that of the directors. Why would directors be more efficient than shareholders at improving managerial performance and changing their incentives? Directors would be more effective at fixture the performance of managers specifically because they have a position to more directly control the managers incentives. Shareholders can only periodically ballot on...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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