The manager-stockholder conflict generally becomes worse
A) the smaller the firm.
B) the larger the firm.
C) the more the firm borrows from banks.
D) the less the firm borrows from banks.

Question

Quizplus · Accepted Answer

The larger the firm, the more dispersed ownership tends to be, which makes it more difficult for shareholders to monitor management and hold them accountable for their actions. This can exacerbate conflict between managers and shareholders. Additionally, larger firms tend to have more complex operations and strategic decision-making processes, which can make it harder for shareholders to understand and evaluate managerial decisions. Therefore, the manager-stockholder conflict generally becomes worse in larger firms.

The Manager-Stockholder Conflict Generally Becomes Worse