You are the CEO of a company and you are considering entering into an agreement to have your…

You are the CEO of a
company and you are considering entering into an agreement to have your company
buy another company. You think the price might be too high, but you will be the
CEO of the combined, much larger company. You know that when the company gets
bigger, your pay and prestige will increase.

What is the nature of
the agency conflict here and how is it related to ethical considerations?

(Select all the choices
that apply.)

A. There is an ethical
dilemma when the CEO of a firm has incentives that are opposite to those of the
shareholders.

B. There is a legal
issue when the CEO of a firm has incentives that are opposite to those of the
shareholders.

C. In this case, you (as
the CEO) have an incentive to potentially overpay for another company (which
would be damaging to your shareholders) because the value of the combined
company will improve.

D. In this case, you (as
the CEO) have an incentive to potentially overpay for another company (which
would be damaging to your shareholders) because your pay and prestige will
improve.