What does agency problem mean?

agency problem meaning in Law Dictionary

When an abuse of energy is used to benefit the representative maybe not the organization.

agency problem meaning in Business Dictionary

A conflict arising when individuals (the agents) entrusted to maintain the interests of other individuals (the principals) make use of the expert or power for their very own benefit as an alternative.u000du000aIt is a pervading issue and is present in almost every business whether a small business, church, club, or federal government. Companies attempt to solve it by instituting actions like difficult assessment processes, rewards for good behavior and punishments for bad behavior, watchdog systems, and so on but no organization can remedy it totally since the prices to do therefore ultimately outweigh the well worth of the results. Also referred to as principal-agent problem or principal-agency issue.