Source: Ronald Barusch, $"$CBS and the Need to Hold Directors Accountable," Wall Street Journal, September $16,2018.$

a$.$ What is the key principal$-$agent problem that exists in some corporations?

A$.$ The firm's top management$-$the agents$-$may pursue their own interests rather than the interests of its shareholders$-$the principal.

B$.$ The firm's shareholders $-$ the principal$-$may pursue their own interests rather than the interests of the firm's top management$-$ the agents.

C$.$ The firm's top management$-$the principal$-$may pursue their own interests rather than the interests of its workers$-$the agents.

D$.$ The firm's top management$-$ the agents$-$may pursue their own interests ratner than the interests of the firm's customers$-$the principal.

b$.$ To whom are members of the board of directors responsible?

A$.$ The shareholders of the corporation.

B$.$ The customers of the corporation.

C$.$ The employees of the corporation.

D$.$ The inside directors of the corporation.

c$.$ What does the columnist mean by "governance failures"? Who is failing? Why might these failures be happening?

A$.$ Governance failure is when a firm's top management fails to act in the best interests of its shareholders and instead acts in ways to increase the profits of the firm.

B$.$ Governance failure is when a firm's top management fails to act in the best interests of its board of directors and instead acts in ways to increase the profits of the firm.

C$.$ Governance failure is when a firm's top management fails to act in the best interests of its customers and instead acts in ways to increase their own salaries and bonuses.

D$.$ Governance failure is when a firm's top management fails to act in the best interests of its shareholders and instead acts in ways to increase their own salaries and bonuses.