An expense, either direct or indirect, that is borne by a principal as a result of having delegated authority to an agent. An example is the costs borne by shareholders to encourage managers to maximize a firm's stock price rather than act in their own self-interest. These costs may also arise from lost efficiency and the expense of monitoring management to ensure that debtholders' rights are protected.
An expense, either direct or indirect, that is borne by a principal as a result of having delegated authority to an agent. An example is the costs borne by shareholders to encourage managers to maximize a firm's stock price rather than act in their own self-interest. These costs may also arise from lost efficiency and the expense of monitoring management to ensure that debtholders' rights are protected.