Principal-agent conflicts in corporations is a type of _________________ problem. moral hazard insider trading free-riding adverse...

Principal-agent conflicts in corporations is a type of _________________ problem.

		moral hazard
		insider trading
		free-riding
		adverse selection

Solutions

Expert Solution

Principle agent conflict is a great example of moral hazards.

Principal agent conflicts usually take place between the person who controls an asset which has been delegated and the real owner of the asset. The problem arise in these situations where agent take decisions on behalf of the principal. Herby the agent will contradict the interests of the principal. This type of problems is commonly named as moral hazards because these problems are occurred when the agents act according to their best interest. Here the issue of moral hazard arises because the principal will be unaware of the way in which the agents behave.

Rahul Sunny answered 1 year ago

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