Owners and managers of the firm may have different interests and incentives.

Name: Owners and managers of the firm may have different interests and incentives.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

This situation is described by the principal-agent problem, where the owners (principals) and the managers (agents) may have different objectives, leading to potential conflicts of interest. Owners typically aim for the maximization of shareholder value, while managers might prioritize personal goals, such as job security or personal benefits.

Owners and Managers of the Firm May Have Different Interests