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Both Company A and Company B are large public corporations with subsidiaries throughout the world. Company A uses a centralized approach and makes most of the decisions for its subsidiaries. Company B uses a decentralized approach and its subsidiaries make many of their own decisions.

a. Would the agency problem be more pronounced for Company A or for Company B? Explain.
b. Would agency costs likely be higher for Berkley or Oakley? Why?
c. Discuss a major advantage and a major disadvantage to a centralized approach such as Company A uses.
d. Discuss a major advantage and a major disadvantage to a decentralized approach such as Company B uses.
e. Which approach is better, a centralized or decentralized approach? Explain

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