Conflicts that arise between the interests of managers and stockholders are referred to as:
A) Control problems.
B) Agency problems.
C) Management conflicts.
D) Stockholder conflicts.
E) Proxy fights.

Question

Quizplus · Accepted Answer

Agency problems occur when there's a conflict of interest between the needs or desires of the principal (in this case, the stockholders) and the agents (the managers) who are hired to perform tasks on behalf of the principal. This misalignment can lead to inefficiencies and issues within the company.

Conflicts That Arise Between the Interests of Managers and Stockholders