How does a principal-agent problem arise in corporate world

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Problem 1: The principal-agent problem is a conflict in priorities between a person or group and the representative authorized to act on their behalf. Explain with an example, how does a principal-agent problem arise in a corporate world. Within the agency context, discuss how does a maximisation of long-run expected cash flows to a firm is translated into maximisation of shareholders' wealth.

Reference no: EM132993547

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