Which of the following contributes to principal-agent problems in large modern firms?
A) The dispersion of information among many decision makers
B) The consolidation of management and ownership in a single entity
C) The specialization of labor.
D) The agreement between managers of different departments to increase profits at any cost
E) The use of in-house production rather than outsourcing.

Question

Quizplus · Accepted Answer

The dispersion of information among many decision makers can lead to principal-agent problems because it creates asymmetries in information, making it difficult for principals (owners) to monitor and ensure that agents (managers) are acting in the owners' best interests.

Which of the Following Contributes to Principal-Agent Problems in Large