Question

Lisa is the CEO of a corporation. As such, she is authorized to make daily operating decisions for
the company on behalf of shareholders.
Which type of agent relationship does this represent?

Answer 1

Answer:

Principal-agent relationship

Explanation:

The principal  Agent relationship is where a person or group of persons duly authorizes another to act on their behalf. Usually, the principal has more authority or is more senior and instructs the agent to represent them in certain aspects. The principle Agency relationship empowers the agent to act on behalf of the principal.

Lisa and the shareholders are a good example of a principal-agent relationship. Lisa, the CEO, should act in the best interests of the shareholder. Here, Linda is the agent who has been authorized to act on behalf of the shareholders, the principal.