Both Cameron and Daley are large public corporations with subsidiaries throughout the world. Cameron uses a centralized approach and makes most of the decisions for its subsidiaries. Daley uses a decentralized approach and its subsidiaries make many of their own decisions.
a. Would the agency problem be more pronounced for Cameron or for Daley? Explain.
b. Would agency costs likely be higher for Cameron or for Daley? Why?
c. Discuss a major advantage and a major disadvantage to a centralized approach such as Cameron uses.
d. Discuss a major advantage and a major disadvantage to a decentralized approach such as Daley uses.
e. Which is better, a centralized or decentralized approach? Explain.