There is a risk in all large firms that managers may not always act in the best interests of the equity or debt holders. What is this problem called?
A) Agency cost
B) Business risk
C) Empowerment
D) Disempowerment

Question

Quizplus · Accepted Answer

This problem is called agency cost. It refers to the potential conflict of interest that arises when managers act in their own self-interest instead of acting in the best interests of the shareholders or debt holders. This can lead to a loss of value for these stakeholders.

There Is a Risk in All Large Firms That Managers