Conflict of Interest between
Management and Equity Holder
The equity holder is the owner of the business and management
are their agent to manage the business for them. The management (Directors)
derives power from the equity holder and accountable to equity holder for their
performance.
1.
Director Salary:
The management is interested in more benefit while the equity
holder would like to keep the salary and benefit at lower side because it will
adversely affect the profitability of the organization.
2.
Short Term Objective:
The management is more
interested in short term boost of the profit which would result in increase in
their benefit and bonuses. However, equity holder is more interested in
stability and long term profitability of the organization.
3.
Risk Assessment:
The management would love to take high risk decision to earn
more profit in short run for the short term benefits while the equity holder
are more interested in secured investment decisions.
4.
Status Expenditure:
