The root cause of agency problems is conflicts of interest.

Question

Quizplus · Accepted Answer

Agency problems arise when there is a conflict of interest between the principal (such as shareholders) and the agent (such as managers or employees). These conflicts can arise when agents have incentives that are not aligned with those of the principal, leading them to act in their own self-interest rather than in the best interests of the organization. Thus, the root cause of agency problems is indeed conflicts of interest.

The Root Cause of Agency Problems Is Conflicts of Interest