Which of the following is a cause of 'agency problem'?
A) Sub-contractors failure to meet milestone deadlines.
B) Conflict of interest between buyer and seller due to moral hazard.
C) Conflict of interest between buyer and seller due to engineering and planning problems.
D) Conflict of interest between buyer and seller due to poor quality performance.

Question

Which of the following is a cause of 'agency problem'? 
A) Sub-contractors failure to meet milestone deadlines. 
B) Conflict of interest between buyer and seller due to moral hazard. 
C) Conflict of interest between buyer and seller due to engineering and planning problems. 
D) Conflict of interest between buyer and seller due to poor quality performance.

Quizplus · Accepted Answer

Agency problem arises due to the conflict of interest between the principal and the agent. In this case, the buyer and seller may have conflicting interests due to moral hazard, leading to an agency problem. Option A, C, and D do not necessarily relate to agency problems.

Which of the Following Is a Cause of 'Agency Problem