CPA Inc. is a publicly traded company. The stockholders of this company delegate the authority to make decisions for the company to a CEO named Joaquin. The stockholders expect Joaquin to make decisions that will benefit the company. However, Joaquin begins to find ways to maximize his total compensation, which hinders CPA's performance. This scenario reflects

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This scenario reflects principal-agent problems. This problem can arise whenever principals delegate decision making and control over resources to agents, with the expectation that they will act in the principals' best interest. The conflict arises if the agents pursue their own personal interests, which can be at odds with the principals' goals.

CPA Inc Is a Publicly Traded Company