The agency problem in corporate governance is about how to get managers' interests well aligned with the shareholders' interests.

Question

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The agency problem arises when there is a conflict of interest between the managers (agents) and the shareholders (principals) who own the company. This problem arises when the managers prioritize their self-interest over the shareholders' interests. Therefore, the main objective of corporate governance is to mitigate this agency problem by aligning the interests of managers with the shareholders to enhance the company's performance.

The Agency Problem in Corporate Governance Is About How to Get