Final answer:
The example of a manager in a corporation making online personal travel arrangements during work hours is considered an agency problem, as this represents a conflict of interest where the manager's actions do not align with the best interests of the shareholders.
Step-by-step explanation:
An agency problem typically occurs in a scenario where there is a conflict of interest between the principals (owners or shareholders) and the agents (managers or executives) who are hired to run the company on behalf of the owners. It specifically refers to the problems that arise when agents do not perfectly align their actions with the best interests of the principals.
In the given examples:
- An owner of a sole proprietorship taking company office supplies for personal use is not an agency problem, as they are the principal and agent in one; no conflict arises between different parties.
- Both partners in a general partnership closing the office early to go skiing is not inherently an agency problem as they are both principals and have likely agreed on the action.
- A manager in a corporation buying shares of the company's stock when the price falls is not an agency problem. This is a personal investment decision and can even align with shareholder interests if it signals confidence in the company.
- A manager in a corporation making online personal travel arrangements during work hours is an example of an agency problem, as the manager's actions are not in the best interest of the shareholders and instead serve their personal interest.
- A shareholder in a corporation selling shares of the company's stock when the price rises is not an agency problem. Shareholders are principals and selling shares is a personal financial decision; it does not reflect a conflict of interest in running the company.