CORPORATE GOVERNANCE AND AGENCY THEORY HOW TO CONTROL AGENCY COSTS

Issam Mf Saltaji ()
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Issam Mf Saltaji: Academy of Economic Studies, Bucharest, Romania

Internal Auditing & Risk Management, 2013, vol. 32, issue 1, 51-64

Abstract: Agency theory is considered as the main theory in business word separating ownership from management, which makes conflicts called “agency problems” as a result of interest conflicts between managers and shareholders. These problems are costs on a company to encourage high performance of managers, need to be monitored and minimized to protect the company from bankruptcy. Agency theory grants to manager a huge margin allowing them to use free cash and getting more benefits returned to their own behalf. This relationship is needed to be discussed highlighting on the possibility of controlling and avoiding such as issues can lead the company to unpleasant situation and force managers to lose their positions.

Date: 2013
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