Study Guide > AFA 706-Fall 2021-Session 10


Toronto Metropolitan University AFA 706 Holmström’s Agency Model  Basing manager’s compensation on 2 variables is better than on 1 variable, unless the 2 variables are perfectly correlated.  Holmström’s model implies that net income and share price taken together better reflects current manager effort than either variable alone.  Share price is ...[Show More]

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