answersLogoWhite

0

The principal-agent problem occurs when a principal hires an agent to act on their behalf, but the agent may not always act in the best interest of the principal. Examples include a CEO prioritizing their own interests over shareholders, or a doctor recommending unnecessary treatments for profit. This can lead to conflicts of interest, lack of trust, and inefficiencies in the relationship between principals and agents.

User Avatar

AnswerBot

6mo ago

What else can I help you with?

Related Questions

Relationship between plants and the bees that pollinate them are examples of what?

Fertilization.


What is the relationship between science and technology give the examples of their relationship?

Science is what does the discovering, technology is how we use it.


What is the relationship between marginal physical product MPP and marginal cost MC Provide an examples?

what is the relationship between marginal physical product and marginal cos


How would you describe agency theory?

Agency theory pertains to the relationship between two parties; the first is the principal (or principals) and the second, the agent (or agents), who are engaged as employees or independent contractors.


Examples of interpersonal relationship?

collaboration between the clients and other health care workers


What is the difference between a relationship and ownership?

The different between relationship and ownership is that, relationship means how closer are you with a person. While ownership means a person who has something, examples car, motorcycle, bag, phone, e.t.c.


What are the example of simbiotic?

Some examples of symbiotic relationships are the relationship between bees and flowers (pollination), the partnership between clownfish and sea anemones, and the mutualistic relationship between bacteria in our gut and our digestive system.


How does agency problem affect the relationship of financial manager with the company?

agency problem affects the financial manager relationship with the company by means of trust. if we are going to study the principal-agent relationship (principals=shareholders ; agent=managers,CEO,BOD), the agent will stand for and on behalf of the principal with the accompany of trust and confidence by the principals, but when agency problem occur where the agents are planning to pursue some objectives that are attractive to them while not beneficial for the principal the gap between the shareholders and the management team were created...


What word shows relationship between words or groups of words?

A conjunction is a word that shows the relationship between words or groups of words, connecting them together in a sentence. Examples of conjunctions include "and," "but," and "or."


What are some examples of prepersion?

Some examples of prepositions include: at, in, on, for, from, with, between, under, over, and through. These words are used to show the relationship between a noun or pronoun and other words in a sentence.


What type of pronoun show a relationship in location between the speaker and the object?

Demonstrative pronouns show the relationship between a subject and the object. The demonstrative pronouns are this, that, these, and those.


What are some common examples of relationship dialectics and how can they impact the dynamics of a relationship?

Common examples of relationship dialectics include autonomy vs. connection, openness vs. closedness, and predictability vs. novelty. These dialectics can impact a relationship by creating tension and conflict as partners navigate the balance between opposing needs and desires. Finding a healthy equilibrium between these dialectics is crucial for maintaining a strong and fulfilling relationship.