Hello,
The following question (question 41 under the Governance mock test is as follows):
- In relation to the agency problem, which statement is incorrect?
a) Through appropriate chains of accountability, corporate governance seeks to ensure that the interests of management and directors are more closely aligned.
b) The agency problem arises when the interests of the managers may not be wholly aligned with the interests of the owners of the business.
c) The agency problem arises from the separation of ownership and management of a company.
According to the quiz, the correct answer is a), with the explanation that "Alignment should be with the owners of the business, not directors", yet, answer a) seems to say that the interest of the management and DIRECTORS should be aligned.
According to me, the correct answer should be option b) The agency problem arises when the interests of the managers may not be wholly aligned with the interests of the owners of the business.
Could you please confirm?