Managers' pursuit of which of the following objectives would NOT lead to a principal-agent problem in a corporation?
A) The corporation's growth
B) Increased market share for the corporation
C) The maximum possible profit for the corporation
D) A great "golden parachute" or retirement package
E) Increased current salary and fringe benefits

Question

Quizplus · Accepted Answer

The principal-agent problem arises when the goals of the managers (agents) do not align with the goals of the owners or shareholders (principals). Pursuing the maximum possible profit for the corporation aligns the interests of managers with those of the shareholders, as both parties benefit from the company's profitability. This does not create a conflict of interest, unlike the other options which can prioritize personal gain or growth metrics over profitability.

Managers' Pursuit of Which of the Following Objectives Would NOT