What is the "agency problem" often discussed in corporate governance?

Question

Quizplus · Accepted Answer

The agency problem refers to the conflict of interest that arises between the managers (agents) of a company and the shareholders (principal) because the managers may not always act in the best interest of the shareholders. They may pursue their own goals, which may not align with the goals of the shareholders. Therefore, the challenge in corporate governance is how to get the managers' interests well-aligned with the shareholders' interests.

What Is the "Agency Problem" Often Discussed in Corporate Governance