00:01
This question will determine a short definition for agency problems.
00:05
We're given four choices and told that agency problems are essentially blank.
00:10
So let's review the definition.
00:12
Agency problems, according to the book, are conflicts.
00:14
Let's write that down.
00:16
That is an important thought.
00:21
That occur when an agent, that's a manager, who is entrusted with following the interests of the principal, that is the owner or shareholder of an organization, who abuses their position to further their own personal goals.
00:34
Now, jerome, a small picture over here of the company.
00:37
I want you to think about it like this.
00:39
We have the shareholders over here.
00:41
They're pulling on the company, making demands to meet their own goals...