Who
owns a corporation? Describe the process whereby the owners control the
firm’s management. What is the main reason that an agency relationship
exists in the corporate form of organization? In this context, what
kinds of problems can arise?
In the corporate form of ownership, the shareholders 
are the owners of the firm. The shareholders elect the directors of the corporation, who in turn appoint the firm's management .
This separation of ownership from control in the corporate form of
organization is what causes agency problems to exist. Management may act
in its own or someone else's best interests, rather than those of the shareholders . If such events occur, they may contradict the goal of maximizing the share price of the equity of the firm.
are the owners of the firm. The shareholders elect the directors of the corporation, who in turn appoint the firm's management .
This separation of ownership from control in the corporate form of
organization is what causes agency problems to exist. Management may act
in its own or someone else's best interests, rather than those of the shareholders . If such events occur, they may contradict the goal of maximizing the share price of the equity of the firm.
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