Question

How does the agency problem present an ethical dilemma to corporate manage

Answer 1

Agency problem causes ethical dilemma to manager in following ways:
Conflict of interest between manager and shareholder. Managers focus on maximum salaries, avoiding firing whereas shareholders want highest shareholder return. Hence Managers might not want takeover bid as it puts their jobs at risk even though it increases shareholder's value.
Shareholders might fire any manager if they find that the manager’s objective is not aligned with objectives of shareholders. Hence mangers look after their own interest at saving their jobs at the expense of shareholders' interest.