Agency costs

In corporate governance theory, costs to shareholders arising as a result of someone other than the shareholders being responsible for managing the corporation’s business. They include the direct costs associated with directors and officers acting to further their personal interests, in an opportunistic way, at the expense of the corporation which reduces the value of shareholders’ shares, and the related costs that shareholders incur to monitor their agents, the directors and officers, for the purpose of guarding against such opportunistic behaviour and to hold them accountable.

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