Agency Problem

What Does Agency Problem Mean?
A conflict of interest arising between creditors, shareholders and management because of differing goals.

Investopedia explains Agency Problem
For example, an agency problem exists when management and stockholders have conflicting ideas on how the company should be run.

Related Terms

Agency Costs
Asset Substitution Problem
Corporate Governance
Creditor
Shareholder
Underinvestment Problem
More Related Terms

Related Links

Moral Hazards: A Bump In The Contract Road - Learn how this phenomenon can cause a party in an agreement to behave differently than expected.
Governance Pays - Learn about how the way a company keeps its management in check can affect the bottom line.
What is the difference between a president and a chief executive officer?
Agency Theory Framework - An article dealing with the problems arising in a principal/agent relationship.

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