The conflict of interest between management and stockholders is known as:
A) the stockholder/management problem.
B) the management problem.
C) the agency problem.
D) a problem relating to excess compensation.

Question

Quizplus · Accepted Answer

The conflict of interest between management and stockholders is known as the agency problem. This is because managers (agents) are hired and paid by stockholders (principals) to make decisions that will increase the value of the company, but managers may prioritize their own interests over those of the stockholders.

The Conflict of Interest Between Management and Stockholders Is Known