Final answer:
Information asymmetry is a root cause of agency conflicts within a corporation, leading to potential misalignments between management and shareholder interests.
Step-by-step explanation:
A root cause of agency conflicts within a corporation is often attributed to information asymmetry. This situation arises when there is a gap in the information shared between the management and shareholders. Managers or executives who run a company typically have more detailed and current knowledge about the actual state and potential of the business than the external investors or shareholders. This imbalance often leads to conflicts of interest, as managers might pursue strategies that benefit themselves rather than the shareholders who actually own the company. Effective corporate governance is intended to monitor and mitigate these potential conflicts, but it can sometimes fail, leading to issues like those observed in the Lehman Brothers case.