discribe and explain the agency theory in your own words. you answer should also include the agency problem

Hey.. agency theory is a principle that is used to explain and resolve issues in the relationship between business principals and their agents. Most commonly, that relationship is the one between shareholders, as principals, and company executives, as agents. Now the agency problem is that many authors have found that separations of ownership from control, conflict of interest, risk averseness, information asymmetry are the leading causes for agency problem; while it was found that ownership structure, executive ownership and governance mechanism like board structure can minimise the agency cost.

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