Notice of RetractionAgency costs on the company's financial management
Generally, many expenses exist in the distribution process of assets among different relevant parties. The separation of ownership and management will result in the principal-agent relationship, which can lead to agency cost. This is just the focus of this paper: How to understand agency cost and how to cope with it. First of all, the paper discussed the correlated theory and concepts. Furthermore, some aspects in which agency cost can affect financial management were analyzed. The last but not least, some measures which can reduce agency cost and increase firm's value were submitted. The major conclusion is that agency cost can affect all fields of financial management, and people must pay more attention to it.