Conﬂicts that arise between the interests of managers and stockholders are referred to as:
A) Control problems.
B) Agency problems.
C) Management conﬂicts.
D) Stockholder conﬂicts.
E) Proxy ﬁghts.

Question

Quizplus · Accepted Answer

The conflicts that arise between the interests of managers and stockholders are referred to as agency problems. This is because managers act as agents for the shareholders but may pursue their own interests instead. This can result in a misalignment of incentives and conflicts of interest between these two groups. Control problems refer to issues of control and decision-making power within a company. Management conflicts and shareholder conflicts are not as specific and do not capture the nature of the conflict as well as agency problems. Proxy fights are a tactic used by shareholders to gain control of a company's management.

Conﬂicts That Arise Between the Interests of Managers and Stockholders