The possible conflict between managers and owners is sometimes called the
A) principal-subordinate problem
B) principal-agent problem
C) boss-subordinate problem
D) boss-agent problem

Question

Quizplus · Accepted Answer

The conflict between managers and owners is termed as the principal-agent problem. This problem arises due to the divergence of goals and interests between the principal (owner) and the agent (manager). The owner wants to maximize profits and shareholder wealth, while the manager may have incentives to prioritize their own interests or other stakeholders' interests over the owners'. This can lead to a misalignment of interests and potential conflicts between managers and owners.

The Possible Conflict Between Managers and Owners Is Sometimes Called