Since it is costly for stockholders to monitor corporate managers, managers may be able to achieve personal perks and pursue other policies that conflict with profit maximization. This is an example of

Question

Quizplus · Accepted Answer

The principal-agent problem occurs when managers (agents) pursue their own interests rather than the interests of the stockholders (principals), leading to conflicts such as personal perks over profit maximization.

Since It Is Costly for Stockholders to Monitor Corporate Managers