The agency problem is best defined as a conflict of interest between a firm's:
A) Various employees.
B) Various managers.
C) Managers and the firm's employees.
D) Stockholders and the firm's managers.
E) Stockholders and the firm's debtors.

Question

Quizplus · Accepted Answer

The agency problem refers to the conflict of interest that arises between the stockholders (owners) and the firm's managers, who are hired to run the company on behalf of the owners but may pursue their own interests.

The Agency Problem Is Best Defined as a Conflict of Interest