A conflict of interest between the stockholders and management of a firm is called:
A) stockholders' liability.
B) corporate breakdown.
C) the agency problem.
D) corporate activism.
E) legal liability.

Question

Quizplus · Accepted Answer

The conflict of interest between the stockholders and management of a firm is called the agency problem. The agency problem arises because managers (the agents) are not the owners (the principals) of the firm and may prioritize their own interests over those of the stockholders.

A Conflict of Interest Between the Stockholders and Management of a Firm