Of the two conflicts, __________ get(s)more severe the larger the firm.
A) the stockholder-lender conflict
B) manager-stockholder conflict
C) both
D) neither

Question

Quizplus · Accepted Answer

As the size of the firm increases, the separation between ownership (stockholders) and management also increases. This creates a greater potential for conflicts of interest between managers and stockholders, as managers may prioritize their own interests over those of the shareholders. Meanwhile, the stockholder-lender conflict remains relatively constant regardless of firm size, as both parties are typically focused on maximizing financial returns.

Of the Two Conflicts, __________ Get(s)more Severe the Larger the Firm