Corporate Governance
Introductory
Agency Costs
The costs that arise when one party controls resources or makes decisions on behalf of another party whose interests may differ.
Why It Matters
Agency costs explain why boards, fiduciary duties, disclosure, compensation design, shareholder voting, and monitoring institutions matter in corporate law.
Selected Literature
A short list of directly relevant archive entries.
1972
Introductory
Production, Information Costs, and Economic Organization
Armen A. Alchian and Harold Demsetz
American Economic Review
1976
Introductory
Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure
Michael C. Jensen and William H. Meckling
Journal of Financial Economics
1980
Advanced
2017
Advanced
Agency Problems and Legal Strategies
John Armour, Henry Hansmann, and Reinier Kraakman
The Anatomy of Corporate Law
Related Cases
1939
Corporate Law
Guth v. Loft, Inc.
5 A.2d 503 (Del. 1939)
Duty of loyalty and a corporate officer's appropriation of an opportunity connected to the corporation's business and resources.
1963
Securities Regulation
SEC v. Capital Gains Research Bureau, Inc.
375 U.S. 180 (1963)
Whether an investment adviser's undisclosed practice of trading before and after its recommendations could be enjoined under the Investment Advisers Act.
1983
Corporate Law
Weinberger v. UOP, Inc.
457 A.2d 701 (Del. 1983)
Entire fairness review, minority-shareholder protection, and valuation in a controlling-shareholder freeze-out merger.
1988
Corporate Law
Blasius Industries, Inc. v. Atlas Corp.
564 A.2d 651 (Del. Ch. 1988)
Board action taken for the primary purpose of interfering with shareholder voting power.