The main source of an agency issue in a publicly traded
corporation is due to....
A. Societal requirements to fulfill higher ethical and moral
standards
B. Double taxation system and a limited liability for
shareholders
C. Separation between who make decision and who own the company
CORRECT; The main problems in the Agency relationship comes
as a result of conflict of interest between the Company's
Management and the Company's stockholders. This conflict of
interest occurs in a relationship where one party is expected to
act on behalf of and to the interests of the other
party.
D. The firm's business cycle problem
E. Perfect rewards and punishments system that are adopted in a
corporation