# Principal-agent problem (also referred to in German as KapitalgeberManagement-Dilemma)

- Canonical URL: https://www.gerhardmerk.de/principal-agent-problem-also-referred-to-in-german-as-kapitalgebermanagement-dilemma
- Post ID: 592879
- Modified: 2023-07-25T21:14:14+00:00
- Language: en

## Definition

Actions and decisions of management conflict with the interests of the principal or owners. This can lead to insolvencies with far-reaching consequences even for the stability of the global financial system as a result of daring or even fraudulent actions by managers - Enron scandal 2001, WorldCom scandal 2002. - A lending institution (principal) is generally at an informational disadvantage vis-à-vis the management (agent) of a company. - See activity-shifting, balance sheet-determined, Anderson scandal, corporate governance, Peter rule. - Cf. ECB Monthly Bulletin of May 2005, p. 95 ff., Deutsche Bundesbank Monthly Bulletin of January 2012, p. 15 (principal-agent problem and the theory of the financing hierarchy). Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

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