The divorce of owner ship and control causes a problem usually referred to by economists as ?
Correct answer: B. principal-agent problem.
- A. profit myopia
- B. principal-agent problem.
- C. merger mania.
- D. moral hazard
Explanation
When ownership is separated from control, shareholders as principals must rely on managers as agents, creating the principal-agent problem. Moral hazard can result from this relationship, but it is the specific problem named by the separation itself.
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