• CONFLICTS BETWEEN MANAGERS AND SHAREHOLDERS
• MECHANISMS FOR DEALING WITH SHAREHOLDER-MANAGER CONFLICTS
• STOCKHOLDERS VERSUS CREDITORS: A SECOND AGENCY CONFLICT
• AGENCY VERSUS CONTRACT
• AGENCY AND ETHICS
• FURTHER READING:

Agency theory suggests that the firm can be viewed as a nexus of contracts (loosely defined) between resource holders. An agency relationship arises whenever one or more individuals, called principals, hire one or more other individuals, called agents, to perform some service and then delegate decision-making authority to the agents. The primary agency relationships in business are those (1) between...