What is the name given to the problem arising due to the separation of control between shareholders and the equity they contribute?
A)The equity usage problem
B)The manager remuneration problem
C)The principal- agent problem
D)The owners' interests problem

Question

Quizplus · Accepted Answer

The separation of control between shareholders and their investment leads to the principal-agent problem, where managers may act in their own self-interest rather than in the interest of the shareholders. This is because managers may prioritize their goals and needs over those of shareholders, leading to a misalignment of interests between the two. Therefore, C is the correct choice as it relates directly to the separation of control between shareholders and their equity.

What Is the Name Given to the Problem Arising Due