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
A. time compression diseconomies.
B. experience-curve effects.
C. principal-agent problems.
D. resource ambiguity.
Answer: principal-agent problems