AGENCY THEORY IN THE CORPORATE GOVERNANCE

The emergence and unprecedented growth of joint stock companies is undoubtedly one of the most significant economic developments.One of the outcomes of this development is the separation of ownership and control of the companies. Such separation make it possible for the managers of the companies to make dicisions to serve their interes at the expense of the companies shareholders. This conflict of interests has created a cricis which is called agency problem. The conflict between managers and shareholders interest is a major problem in this field.Corporate governance is a regime to control and supervision of the behavior of managers of the companies.