Abstract
Agency cost theory deals with the inevitable divergence of self interest between principal and agent, owner and manager, or employer and employee, the welfare losses thereby created, and the devices and institutions that have evolved to reduce those losses. In the context of the corporate enterprise, there are quite a few such mechanisms, intended to align the interests of managers or controlling owners with those of outside stockholders or to limit the extent of divergence.
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© 2002 Palgrave Macmillan, a division of Macmillan Publishers Limited
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Scott, K.E. (2002). Agency Costs and Corporate Governance. In: Newman, P. (eds) The New Palgrave Dictionary of Economics and the Law. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-74173-1_7
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DOI: https://doi.org/10.1007/978-1-349-74173-1_7
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