The stockholder-manager conflict in a large publicly held firm is manifested in all of the following ways except
A) the managers implement very low-risk strategies that have very low returns.
B) the managers implement strategies that maximize the value of the firm.
C) managers pursue strategies that maximize firm size rather than the value of the firm.
D) the managers attempt to maximize their salaries.

Question

Quizplus · Accepted Answer

The stockholder-manager conflict, also known as the principal-agent problem, arises when the interests of the managers (agents) diverge from those of the shareholders (principals). Managers implementing strategies that maximize the value of the firm align with shareholders' interests, thus it does not represent a conflict. Choices A, C, and D illustrate typical conflicts where managers' actions may not align with maximizing shareholder value.

The Stockholder-Manager Conflict in a Large Publicly Held Firm Is