In which of the following cases will the agency problem between shareh

In which of the following cases will the agency problem between shareholders and managers be the
greatest?

A) The Johnson family owns 50% of the common stock of the company. The other 50% is owned
by 5 mutual funds.
B) 100% of the common stock is owned by the founder of the company who decided to retire and
hired a manager to run his business for him.
C) The common stock of the company is owned by many diverse shareholders, with no
shareholder owning more than 1% of the outstanding stock.
D) All top managers in the company own significant amounts of stock and stock options.

ANSWER

C