This paper discusses how management's role as agency and its relationship with
shareholders, often results in conflict of
interest as far as executive compensation is concerned. While on the one hand management is keen on developing the company through its qualified CEOs,
shareholders are more interested in their returns. This paper discusses how, as a result, there exist problems of differential interests where investment cash flows, financial management and reporting are concerned. These mechanisms are considered to be the lifeblood of an
organization yet have often been subjected to agency issues.