Which of the following is a cause of 'agency problem'?
A) Sub-contractors failure to perform due to poor quality performance.
B) Conflict of interest between buyer and seller due to information asymmetry.
C) Detailed project engineering and planning problems.
D) Sub-contractors failure to perform due to poor quality performance.

Question

Which of the following is a cause of 'agency problem'? 
A) Sub-contractors failure to perform due to poor quality performance. 
B) Conflict of interest between buyer and seller due to information asymmetry. 
C) Detailed project engineering and planning problems. 
D) Sub-contractors failure to perform due to poor quality performance.

Quizplus · Accepted Answer

Agency problem arises when there is a conflict of interest between the principal and the agent. In this case, the buyer and seller have different information, leading to information asymmetry, which can result in the agent (seller) acting in their best interest instead of the principal's (buyer). The other options do not relate to agency problem directly.

Which of the Following Is a Cause of 'Agency Problem