The agency relationship in corporate finance refers to _______________________.
A) when the shareholders hire a manager to run their company
B) when the corporate hires an advertising agency to market their new product/service
C) when the board of directors are elected to staggered terms
D) when the board of directors oversee the CEO

Question

Quizplus · Accepted Answer

The agency relationship in corporate finance refers to the relationship between the shareholders and the managers hired to run the company on their behalf. This relationship can sometimes create conflicts of interest, as managers may prioritize their own interests over those of the shareholders they represent.

The Agency Relationship in Corporate Finance Refers to _______________________