People act in their Own Financial Self Interest:
In financial theory, an agency relationship is one where management manages a business for the owners with the primary goal of maximizing owner wealth. Agency issues then stem from the conflicting interests and behaviours that managers, or advisors/agents have in acting in their own self interests vs. those of the business owners. For example, for a firm, distorting sales/ profits to realize bonuses, or taking on too risky of projects for the probability of a high profit, or passing up risky but viable projects to protect oneâ??s reputation are examples of agency issues. Others are spending excessively on benefits/ perks such as offices, travel, events, cars that erode profits.
Provide an example of this principle as applied to your company or a company in the news. Describe how the business code of conduct and/or the Board of Directors mitigate these risks.