Agency theory is concerned with resolving two problems that can occur in agency relationships.Which of the following is not one of those problems?
A) Goals conflict between principals and agents.
B) Verification of actual agency activity is expensive and difficult to obtain.
C) Principals and agents have differing attitudes toward risk.
D) Stockholders and management align with external stakeholders.

Question

Quizplus · Accepted Answer

Agency theory is concerned with resolving two problems that can occur in agency relationships. The first is the agency problem that arises (1) when the goals of the principals and agents conflict and (2) when it is difficult or expensive for the principal to verify what the agent is actually doing. The second issue is the problem of risk sharing. This arises when the principal and the agent have different attitudes and preferences toward risk.

Agency Theory Is Concerned with Resolving Two Problems That Can