agency problem

Description While audit action is a prominent measure for reducing agency cost, it remains inconclusive how the previous audit experience has an effect upon current audit decision. Guo et al. (2005) conclude that it is unnecessary for the principal to use conditional audit in two-period audit...

A conflict arising when people (the agents) entrusted to look after the interests of others (the principals) use the authority or power for their own benefit instead. It is a pervasive problem and exists in practically every organization whether a business, church, club, or government...