One of the major reasons that corporations have a principal-agent problem is that

Question

Quizplus · Accepted Answer

The principal-agent problem arises when the owners (principals) of a corporation delegate their decision-making authority to managers (agents), who may not always act in the best interest of the owners. This is because direct control and ownership are often separate in corporations, meaning that managers may prioritize their own interests over those of the owners. This creates a conflict of interest and can result in agency costs, such as excessive compensation, shirking, or undertakings of unprofitable projects. Therefore, choice C is the best answer.

One of the Major Reasons That Corporations Have a Principal-Agent