Agency Conflicts Between Managers and Shareholders
When managers work for the company they can be influenced by the own. The agency problem can be defined as the constant struggle between the shareholder principal as the provider of the capital and the manager as the agent working with the shareholders capital. Agency Problem Definition Excessive dividend payments that reduce the companys financial health. . The agency problem is a conflict of interest that occurs when agents dont fully represent the best interests of principals. Some of the measures that can be used to resolve and prevent this problem are subject of analysis in this paper. There is agency problem also between shareholders through managers as agents and creditors as principals in a company. An increase in expenses andor decrease in revenues will diminish the firms profits and hence the shareholders wealth due to residual losses which according to Jensen and Meckling 1976 are a component. Firstly conflicts
