Question

corporate governance is a systematic way of controlling agency cost?

a. true

b. false

Please explain why.

Answer 1

True:-

Corporate governance are the mechanism by which corporations are directed and controlled. It works in the best interest of shareholders.

Agency problems arise when principle delegate some power to the agents and agents use this power to promote their own self being.. Resources are used for own private purposes and thus giving rise to conflict of interest.

Corporate Governance framework encourages the efficient use of resources and requires reporting of accountability of these resources.