In country S individual investors own most of shares in publ

Solution

In corporate finance, the agency problem usually refers to a conflict of interest between a company\'s management and the company\'s stockholders. The manager, acting as the agent for the shareholders, or principals, is supposed to make decisions that will maximize shareholder wealth.

Country B has more severe agency problem as conflict of interest arises between Company management and shareholders and in this case shareholders are investments banks and financial institutions which are itself powerfull too,. and there are lots of chances of conflict between them,whereas in case of Country S shareholders are individuals who hardly raise their voice agaisnt management and even if they raise there voice harldy anyone will listen them or undersatnd them

So, Country B has more severe agency problem .