This refers to the scope for conflicts of interest between those who own a business and those who run it.
The concept reflects the fact that Principals’ (or shareholders/stakeholders) interests for return on their investment may conflict with Agents’ (directors/managers) interests in financial reward and job security. Ideally both parties interests are mutual with increasing shareholder value resulting in good financial rewards and job security for staff.
Principal-Agent Problem is a term normally found in economics and financial management
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