Which of the following would be best considered to be an agency problem in the behaviour of the following financial managers?
A) Michael chooses to enhance his firm's reputation at some cost to its shareholders by sponsoring a team of athletes for the Special Olympics.
B) Bill chooses to pursue a risky investment for the company's funds, because his compensation will substantially rise if it succeeds.
C) James ignores an opportunity for his company to invest in a new drug to fight Alzheimer's disease, judging the drug's chances of succeeding as low.
D) Sue instructs her staff to skip safety inspections in one of the company's factories, knowing that it will likely fail the inspection and incur significant costs to fix.
Correct Answer:
Verified
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