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Agency Problem

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Agency problem
Conflicts of interest among stockholders, bondholders, and managers.

Agency Problem
A situation in which agents of an organization (e.g. the management) use their authority for their own benefit rather than that of the principals (e.g. the shareholders). The agency problem also refers to simple disagreement between agents and principals. For example, a publicly-traded company's board of directors may disagree with shareholders on how to best invest the company's assets. It especially applies when the board wishes to invest in securities that would favor board members' outside interests.


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* Can developing a broader understanding of agency culture and professional values facilitate agency problem solving to a greater extent than can objective knowledge related to agency scope, administrative type and funding sources?
Publicly-traded corporations often attack the agency problem between owners and managers through the use of stock options.
GHILARDUCCI: You want to get rid of the agency problem.
 
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