Problemboth company a and company b are large public, Ask an Expert

Accounting

Problem:

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.

Required:

Question 1: Would the agency problem be more pronounced for Company A or for Company B? Explain.

Question 2: Would agency costs likely be higher for Berkley or Oakley? Why?

Question 3: Discuss a major advantage and a major disadvantage to a centralized approach such as Company A uses.

Question 4: Discuss a major advantage and a major disadvantage to a decentralized approach such as Company B uses.

Question 5: Which approach is better, a centralized or decentralized approach? Explain.

Note: Solve the problem and show all work.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91173716

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