An in-depth analysis of the principal-agent relationship, including its costs, the role of monitoring and bonding, residual losses, and the relevance of agency theory in modern economic and financial systems.
Agency Theory delves into the contractual relationship between a principal and an agent, analyzing the complexities arising from asymmetric information and differing objectives. It has wide applications in economics, corporate governance, and public administration.
The Free Cash Flow Problem arises when firms waste their free cash flow on non-value-adding projects, leading to potentially reduced shareholder value and inefficient resource allocation.
