agency problem meaning
[Economics]
The problem, first systematically identified by Jensen and Meckling (1976), that arises when the shareholders of a firm and its managers have different interests. There is consequently a need for appropriate supervision of the actions of managers. The agency problem was brought into sharp focus by the collapse of the US companies Enron and WorldCom in 2002.
The problem, first systematically identified by Jensen and Meckling (1976), that arises when the shareholders of a firm and its managers have different interests. There is consequently a need for appropriate supervision of the actions of managers. The agency problem was brought into sharp focus by the collapse of the US companies Enron and WorldCom in 2002.
See:
[Finance]
Conflicts of interest among stockholders, bondholders, and managers.
- no problem: Interjection: no p ...
- problem: Noun: problem ...
- agency: Noun: agency ...
Examples
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- prior studies have shown that such a market can be distorted by managerial agency problems
