Which of the following statements best represents the "Agency Problem"?
A) Managers might attempt to benefit themselves in terms of salary and perquisites at the expense of shareholders.
B) The agency problem results from the separation of management and the ownership of the firm.
C) The agency problem may interfere with the implementation of maximizing shareholder wealth.
D) all of the above

Question

Quizplus · Accepted Answer

The agency problem refers to the conflict of interest that arises between the shareholders and the management of the firm. The management might attempt to benefit themselves through higher salaries, perquisites, and other measures, which could negatively impact shareholder wealth. This problem arises due to the separation of ownership and management of the firm. Therefore, all the given options represent the agency problem, making option D the correct answer.

Which of the Following Statements Best Represents the "Agency Problem