![]() The principal–agent problem or agency dilemma, developed in economic theory, concerns the difficulties in motivating one party (the "agent"), to act on behalf of another (the "principal"). ![]() Partly as a result of this separation, corporate governance mechanisms include a system of controls intended to help align managers' incentives with those of shareholders and other stakeholders. The agency view of the corporation posits that the decision rights (control) of the corporation are entrusted to the manager to act in shareholders' (and other parties') interests.
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