Agency Problem

Posted in Finance, Accounting and Economics Terms, Total Reads: 1343
Advertisements

Definition: Agency Problem

Agency problem is a one of a kind problem which arises due to a conflict of interest. Man is selfish by nature and such a problem occurs when an agent who is entrusted with a responsibility towards a principal keeps his own self interest over the interest of the principal whom he is supposed to represent.

Such a problem can never be completely ruled out of a business it is always present to some extent.

The most common form of its occurrence in a business scenario is that the managers have the goal of maximizing shareholder wealth whereas at times they put maximizing their own wealth ahead of their goal.


Search & Explore : Management Dictionary

Browse the definition and meaning of more terms similar to Agency Problem. The Management Dictionary covers over 7000 business concepts from 6 categories.

Advertisements



Share this Page on:

Similar Definitions from same Category: