Question

The problem of preventing managers from acting in their own best interests and instead acting in the best interests of the stockholders is the _______?

Question 16 options:

a. Agency Problem

b. Business environment problem

c. Stockholder problem

d. Principle Problem

Answer 1

The correct answer is letter "A": Agency Problem.

Step-by-step explanation:

An Agency Problem occurs when a conflict of interest arises for an agent, a person acting on behalf of another person. The conflict of interest arises when the agent's own interests are different from those of the principal or the person being acted for. In the corporate world, the Chief Executive Officer (CEO) is an agent acting for the owners of the company: the stockholders.