Agency Theory: The Principle-agent Problem
Mutasa, Turnaround Manager, Zimbabwe, Member
I agree with Bruno. Adding to the detail, the result of such conflicts will typically be that agents pursue self serving interests
, including personal enrichment at the expense of maximizing shareholder wealth.
The diversion of interests between principals and agents is the major problem
in Agency Theory.
Eventually there will be a need to align the divergent interests of the principals and agents which in itself will be yet another problem.