Managerial Theories and the Principal Agent Problem. The Conflict between Managers' and Shareholders' Objectives

Essay from the year 2015 in the subject Business economics - Business Management, Corporate Governance, , language: English, abstract: While it is important to understand the various objectives of firms, it is equally important also to note that some of these objectives may be inconsistent or incompatible with each other due to the principal-agent problem that normally exists between shareholders (owners of the firm) and managers (those who control the firm). This essay serves to analyse some managerial theories in light of the principal-agent problem and the conflict of interest between the shareholders and managers.