Agency Cost

[A] : 

What Does Agency Costs Mean?

A type of internal cost that arises from, or must be paid to, an agent acting on behalf of a principal. Agency costs arise because of core problems such as conflicts of interest between shareholders and management. Shareholders wish for management to run the company in a way that increases shareholder value. But management may wish to grow the company in ways that maximize their personal power and wealth that may not be in the best interests of shareholders.

Src: http://www.investopedia.com/terms/a/agencycosts.asp

[B]

An agency cost is an economic concept that relates to the cost incurred by an entity (such as organizations) associated with problems such as divergent management-shareholder objectives and information asymmetry. The costs consist of two main sources:

1. The costs inherently associated with using an agent (e.g., the risk that agents will use organizational resource for their own benefit) and
2. The costs of techniques used to mitigate the problems associated with using an agent (e.g., the costs of producing financial statements or the use of stock options to align executive interests to shareholder interests).

Though effects of agency cost are present in any agency relationship, the term is most used in business contexts.

Src://http://www.absoluteastronomy.com/topics/Agency_cost