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12 January, 07:53

How does the separation of ownership and management in most C Corporations lead to agency conflicts?

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  1. 12 January, 10:53
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    Through Clash of Interests

    Explanation:

    The agency problem is a 'Principal-agent conflict of interest' inherent in any economic or political arrangement where one party (agent) acts on behalf of the other party's (principal) best interests. The question that leads to this agency problem is 'does the agent always act in the principal's best interest? The answer could be year but there is always a doubt.

    In corporate finance, the agency problem is the conflict of interest that exists between company management and its stockholders.
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