Agency Conflicts between Management and Shareholders

Agency Conflicts between Management and Shareholders

Introduction

Agency conflicts occur due to conflict of interest among different players of organizations. Agency conflict between management and shareholders arise as a result of different goals of managers and shareholders. Although, organizations have a single goal, to maximize the wealth of shareholders; however, managers sometimes peruse their personal goals which can result into agency problems.

The Case of Enron

Enron scandal is one of the prominent examples of agency conflict within an organization. The Enron disaster happed because managers did not acted in the best interest of shareholders. Agency problems happen as ...