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

Question

Quizplus · Accepted Answer

The agency problem refers to the conflict of interest between managers and shareholders, where managers may prioritize their own interests over those of the shareholders. This problem can lead to agency costs, such as excessive executive compensation or poor investment decisions, which can ultimately harm the shareholders. Therefore, addressing the agency problem involves finding ways to align the interests of managers with those of the shareholders, such as through performance-based incentives or increased transparency and accountability.

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