In Which of the Following Cases Will the Agency Problem

Multiple Choice

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

A) 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.
B) The Johnson family owns 50% of the common stock of the company. The other 50% is owned by 5 mutual funds.
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.