Which of the following do not have a principal-agent conflict?
A) Shareholders and the Board of Directors
B) The Board of Directors and the CEO
C) Shareholders and bondholders

Question

Quizplus · Accepted Answer

Shareholders and the board are a classic example of a principal-agent relationship. Jensen and Meckling (1976) argue that shareholders and bondholders also have a principal-agent relationship. In contrast there is not typically a principal-agent relationship between the CEO and the board. The board hires the CEO and controls the compensation of the CEO. The CEO usually sits on the board and is often the chairman of the board of directors. There is usually harmony between the CEO and the board.

Which of the Following Do Not Have a Principal-Agent Conflict