Answer to Question #190377 in Management for Ys Gabin khan

Question

Explain agency problem with examples

Answer 1

An agency problem is a conflict that occurs when an Agent fails to put the best interest of a principal while performing a given task.

An example could be a conflict that occurs between stockholders and stakeholders like customers. Where Stockholders of a company raise the prices of their goods in order to maximize on the profit and the abrupt change of prices cause the customers to boycott the goods.