One common agency problem occurs when managers decide to take some of a firm's capital and invest it in managerial perquisites that do not add economic value to the firm but that do directly benefit those managers.

Question

Quizplus · Accepted Answer

This statement accurately describes one form of agency problem known as managerial opportunism, where managers use their position to take advantage of a company's resources for their personal gain rather than acting in the best interest of the company and its shareholders.

One Common Agency Problem Occurs When Managers Decide to Take