Cambridge, Inc. is a large public company that operates throughout the world. It uses a centralized approach and makes most of the decisions for its many subsidiaries. Bridgeston is also a large public company that operates throughout the world. It uses a decentralized approach and its subsidiaries make most of their own decisions. Which of the following is correct?
Agency costs would be the same for both companies
Agency problems would probably be less pronounced for Cambridge because it is less likely that subsidiary decisions would conflict with the parent
Agency problems would probably be less pronounced for Bridgeston because it is less likely that subsidiary decisions would conflict with the parent
Agency problems would be the same for both companies
None of the above.