What does the agency problem refer to?
A)the conflictsbetween the board of directors and the employees of the firm
B)the problems between financial managers and Internal Revenue agents
C)the problems between stockbrokers and investors
D)the conflicts of interest between the business managers and the stockholders

Question

Quizplus · Accepted Answer

The agency problem refers to the conflicts of interest between the business managers (agents) and the stockholders (principals) of a company. This conflict arises because managers may prioritize their own interests over those of the stockholders, leading to a misalignment of goals and potential loss of shareholder value.

What Does the Agency Problem Refer To