What is an agency relationship? What is managerial opportunism? What assumptions do owners of corporations make about managers as agents?
a) An agency relationship is a legal agreement between a principal and an agent. Managerial opportunism is the act of managers taking advantage of their position for personal gain. Owners of corporations assume that managers will act in the best interest of the company.
b) An agency relationship is a business partnership between two companies. Managerial opportunism is the act of managers seeking new opportunities for the company. Owners of corporations assume that managers will maximize profits.
c) An agency relationship is a contractual agreement between a company and its employees. Managerial opportunism is the act of managers being opportunistic in decision-making. Owners of corporations assume that managers will prioritize shareholder wealth.
d) An agency relationship is a financial arrangement between investors and managers. Managerial opportunism is the act of managers being opportunistic in negotiations. Owners of corporations assume that managers will follow ethical guidelines.
