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Corporate governance addresses the Blank______ problem, which underscores the risk of delegating responsibility and control to individuals who may not have the firm's best interests in mind.Multiple choice question.related diversificationprincipal-agentcorporate social responsibilitySEC financial

Question

Corporate governance addresses the Blank______ problem, which underscores the risk of delegating responsibility and control to individuals who may not have the firm's best interests in mind.Multiple choice question.related diversificationprincipal-agentcorporate social responsibilitySEC financial

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Solution

The correct answer is "principal-agent". This term refers to the problem in corporate governance where the principals (shareholders) delegate control to the agents (managers), who may not always act in the best interests of the principals.

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