Question

The main source of an agency issue in a publicly traded corporation is due to.... A....

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
  • D. The firm's business cycle problem
  • E. Perfect rewards and punishments system that are adopted in a corporation
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Answer #1

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
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