When the owners of a company hire full-time executives to make the day-to-day decisions, this __________ the __________ problem.
A) alleviates; stockholder-lender
B) alleviates; manager-stockholder
C) exacerbates; stockholder-lender
D) exacerbates; manager-stockholder

Question

Quizplus · Accepted Answer

Hiring full-time executives can exacerbate the manager-stockholder problem as it may lead to conflicts of interest between the managers (executives) and the stockholders, where managers may not always act in the best interest of the stockholders.

When the Owners of a Company Hire Full-Time Executives to Make