Final answer:
The root cause of agency conflicts within a corporation can be attributed to factors such as work overload, conflict in defining managerial roles, and difficult work relationships. Lack of oversight by the Board of Directors and inadequate corporate governance can also contribute to agency conflicts.
Step-by-step explanation:
The root cause of agency conflicts within a corporation can be attributed to several factors, including work overload, conflict and ambiguity in defining the managerial role, and difficult work relationships. These conflicts arise when there is a misalignment of interests between managers and shareholders, resulting in managers prioritizing their own personal interests over the interests of the shareholders they represent.
For example, the lack of oversight by the Board of Directors in Lehman Brothers was a major contributing factor to the company's failure. The board paid little attention to the details of the operations, leading to excessive risk-taking by managers and ultimately bankruptcy.
In addition, inadequate corporate governance can also contribute to agency conflicts. If the institutions responsible for overseeing top executives fail in their duties, accurate information may not be available, which can lead to conflicts within the corporation.