The agency problem arises when there is a conflict of interest between the goals of a company’s management and its shareholders. This issue occurs because managers may prioritise their personal gains over the profitability and value of the company. Further reading Agency Problem: Definition, Examples, and Ways To Minimize Risks - Investopedia Principal–agent problem - Wikipedia The Agency Problem: Two Infamous Examples - Investopedia Related pages Corporate governance
Corporate governance addresses the fundamental problem of how to ensure that those who manage a company act in the best interests of its owners, known as the agency problem. It is the system of rules, practices, and processes designed to align the interests of management with those of shareholders and other stakeholders, promoting accountability, transparency, and responsible decision-making. Effective corporate governance is essential for building trust, attracting investment, and fostering long-term sustainable growth. ...