A(n) ________ problem is a problem in determining managerial accountability that arises when delegating authority to managers.
A) self-dealing
B) organizational contract
C) line of command
D) agency

Question

Quizplus · Accepted Answer

The problem of determining managerial accountability when delegating authority to managers is commonly known as agency problem. This arises because the interests of the principal (owner or shareholders) may not be aligned with those of the agent (manager or employee), leading to potential conflicts of interest and moral hazard. Therefore, it is critical to design effective control mechanisms and incentive systems to ensure that managers act in the best interest of the organization.

A(n) ________ Problem Is a Problem in Determining Managerial Accountability