Notes:

• The Agency Problem: The core conflict in governance where management (agents) may prioritize self-interest over shareholder (principal) interests. Governance mechanisms exist to align these interests and reduce “agency costs.”
• Shareholder Primacy vs. Stakeholder Capitalism: The evolution from a sole focus on shareholder value to a model that balances the needs of employees, customers, suppliers, and the community. The G20/OECD Principles assert that long-term shareholder value is best achieved by serving all stakeholders .
• Types of Agency Costs: Monitoring costs (audits), bonding costs (contracts), and residual loss (value lost due to divergent actions).