Agency theory: Difference between revisions
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imported>Administrator (CSV import) |
imported>Doug Williamson m (Spacing.) |
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''Corporate finance''. | ''Corporate finance''. | ||
Agency theory states that company directors and managers act on behalf of shareholders as their agents. | Agency theory states that company directors and managers act on behalf of shareholders as their agents. | ||
An important consequence of agency theory is potential ''agency costs''. | An important consequence of agency theory is potential ''agency costs''. | ||
Agency costs can arise when the interests of directors and shareholders are not well aligned, and the directors act in their own personal interests, and not in the best interests of the shareholders. | Agency costs can arise when the interests of directors and shareholders are not well aligned, and the directors act in their own personal interests, and not in the best interests of the shareholders. | ||
Any agency costs represent a cost to the shareholders and a loss of value for the shareholders. | Any agency costs represent a cost to the shareholders and a loss of value for the shareholders. | ||
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== See also == | == See also == | ||
* [[Agency]] | * [[Agency]] | ||
Revision as of 16:52, 27 July 2013
Corporate finance.
Agency theory states that company directors and managers act on behalf of shareholders as their agents.
An important consequence of agency theory is potential agency costs.
Agency costs can arise when the interests of directors and shareholders are not well aligned, and the directors act in their own personal interests, and not in the best interests of the shareholders. Any agency costs represent a cost to the shareholders and a loss of value for the shareholders.
