The potential conflict of interest between a firm's owners and its managers is referred to as which type of conflict?
A) Organizational
B) Structure
C) Formation
D) Agency
E) Territorial

Question

Quizplus · Accepted Answer

The potential conflict between a firm's owners and its managers is referred to as agency conflict. This is because the owners (shareholders) have entrusted the managers with the responsibility of running the company on their behalf (as agents), but the managers may have their own interests, which may not align with those of the owners. Hence, this creates a potential conflict of interest between the owners and managers, which is known as agency conflict.

The Potential Conflict of Interest Between a Firm's Owners and Its