Company management and stockholders

Reference no: EM133041977

Question: Need to paraphrase theses few lines: Agency theory concerns exchanges where one party, the principal (typically represented by the owner (s) of a business), delegates work to a second party, the agent (typically represented by a manager or some other employee of the business owned by the principal).

An agency problem is a conflict of interest inherent in any relationship where one party is expected to act in another''s best interests. In corporate finance, an agency problem usually refers to a conflict of interest between a company''s management and the company''s stockholders.

Reference no: EM133041977

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