An agency problem is said to exist when there is a conflict of interest between _____ and _____.
A) An agent; his or her representative.
B) A broker; a dealer.
C) A principal; his or her agent.
D) One shareholder; another shareholder.
E) A shareholder; a stakeholder.

Question

Quizplus · Accepted Answer

An agency problem arises when there is a conflict of interest between a principal (such as a shareholder or owner) and his or her agent (such as a manager or executive). This is because the agent may not always act in the best interest of the principal.

An Agency Problem Is Said to Exist When There Is