An agency problem can arise when the agent of the company is the sole owner of the company.

Question

Quizplus · Accepted Answer

An agency problem typically arises when there is a separation between ownership and control, such as when managers (agents) are not the sole owners and may not act in the best interest of the shareholders (principals). If the agent is the sole owner, their interests are aligned with the company's success, eliminating the agency problem.

An Agency Problem Can Arise When the Agent of the Company