Question: Briefly define the principal-agent problem. Equity-based pay (i.e., stock options) has been increasing as a proportion of overall executive pay. In what way should such

Briefly define the principal-agent problem. Equity-based pay (i.e., stock options) has been increasing as a proportion of overall executive pay. In what way should such executive pay mitigate the principal-agent problem? Why are stock options often ineffective as a corporate governance mechanism?

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