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The managers at Movo Automobile Inc. want to diversify their business by acquiring a consumer electronics company. This acquisition would mean increased job security, higher compensation, and greater decision-making authority for the managers. The managers correlate this acquisition to greater power for them rather than to the appreciation in shareholder value. In this scenario, this acquisition by Movo Automobile is most likely a result of:

Respuesta :

Answer:

The correct answer is: principal-agent problems.

Explanation:

Principal-agent problems arise when a principal (stakeholder) hires an agent (manager) to perform duties that contrast with the best interests of the agent. The problem usually arises when the principal offers incentives for the agent to act in the interest of the principal but the agent has an opposing objective. Information asymmetry is typically a fact and the agent is better informed than the principal in the majority of cases.

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