Question

Which one of the following is most apt to create a situation where an agency conflict could arise?

1) separating management from ownership
2) downsizing a firm
3) reducing both management and nonmanagement series
4) decreasing employee turnover
5) increasing the size of a firm's operations

Answer 1

Separating management from ownership is most likely to create an agency conflict.

Step-by-step explanation:

The option that is most apt to create a situation where an agency conflict could arise is 1) separating management from ownership. When management is separated from ownership, managers may make decisions that are not in the best interest of the owners. They may prioritize their own interests or pursue actions that benefit them personally but harm the owners' interests.