Managerial reputation is an External incentive that helps to mitigate the Owner-manager principal-agent problem.
Explanation:
The theory of incentive propose that the behavior of an individual is motivated by the “pull” of external goals, such as rewards, money, or recognition.
In many situations in which a particular goal, such as a promotion at work, can serve as an external incentive that helps activate particular behaviors in an employee
Monetary incentives means to reward the workers for their performance and productivity through money.
Monetary incentives also include employee stock options, profit sharing plans, paid time off, bonuses and cash awards.
So we can say that
Managerial reputation is an External incentive that helps to mitigate the Owner-manager principal-agent problem.
