One important responsibility of boards of directors is to monitor and prevent the potential for agency problems.

Question

Quizplus · Accepted Answer

Agency problems can arise when there is a conflict of interest between the managers (agents) and the shareholders (principals). As the representatives of the shareholders, the board of directors has a duty to monitor and prevent any potential agency problems that could negatively impact the company's performance and value.

One Important Responsibility of Boards of Directors Is to Monitor