Multiple Choice
The principal-agent problem in corporations arises from:
A) the fact that the principal objective of most corporations is to make profits and not to contribute to charity.
B) a conflict of interest between corporate executives who manage the firm and stockholders who own the firm.
C) the view that workers are agents who are not considered to be the principal asset of the corporations for which they work.
D) a perspective that corporations are agents that represent the principal source of power for government and the national economy.
Correct Answer:
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