Pregunta
Which one of the following terms is defined as a conflict of interest between the corporate shareholders and the corporate managers?
articles of incorporation
corporate breakdown
agency problem
bylaws
legal liability
articles of incorporation
corporate breakdown
agency problem
bylaws
legal liability
Ask by Peterson Hall. in the United States
Mar 24,2025
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The term that describes the conflict of interest between corporate shareholders and managers is the agency problem.
Solución

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Extra Insights
The term you’re looking for is “agency problem,” which refers to the conflict of interest that often arises when the goals of corporate managers, who are charged with running the company, diverge from those of the shareholders, who want to maximize their investment returns. This dynamic can lead to managerial decisions that favor personal benefits over shareholder value.
Historically, the agency problem has played a significant role in shaping corporate governance structures. The phenomenon became particularly evident during the rise of large corporations in the 20th century, prompting reforms such as stricter regulations, board oversight, and more transparent financial reporting in order to align the interests of managers and shareholders better.

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