Managers may make decisions that are not consistent with the goals of stockholders.This is referred to as the problem.
A) principal-agent
B) economic disincentive
C) incentive-compromise
D) efficiency-inefficiency
E) equilibrium

Question

Quizplus · Accepted Answer

The problem described in the question is known as the principal-agent problem, which occurs when the interests of the principal (stockholders) and the agent (managers) are not aligned. Managers may prioritize their own interests or other stakeholder interests over maximizing shareholder wealth, leading to agency costs.

Managers May Make Decisions That Are Not Consistent with the Goals