Define and interpret the agency problem in the corporate form of ownership

Agency Problem: It is a conflict of interest between the shareholders of the company and managers of the company. As both, the shareholders and managers have their own interests and goal for their respective companies, like shareholders want to maximize the shareholder's wealth whereas the managers have their own concerns like security, opportunities for middle managers and other workers, status, power, compensation, etc.

The agency problem is a very common problem taking place in every organization. So, this problem arises when a person wants to meet his/her personal expectations/benefits.

Everyone has their own goals and objectives. As the company has goals and objectives likewise the shareholders and managers of the company have their own goals and objectives. so, this disparity among the goals of each others gives rise to agency problems.