One of the fundamental conditions that leads to a potential agency problem in publicly held companies is the separation of firm ownership from ________.
A) lower level employees
B) the board of directors
C) regulatory agencies
D) company management

Question

Quizplus · Accepted Answer

The separation of firm ownership from company management is the fundamental condition that leads to a potential agency problem. This separation means that the shareholders (owners) of a company are not the same people as the managers who run the company on a day-to-day basis. This creates the potential for conflicts of interest, as managers may prioritize their own interests over those of the shareholders.

One of the Fundamental Conditions That Leads to a Potential