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Principal Agent Theory can teach us a lot about the GoldBod $1.7 Billion Loss
By GhanaSummary Newsroom1 min read
Thus, even though the losses sit on the books of the Principal (BoG), they were incurred through the activities of the Agent (Gold Bod).
In this case, and among other things, the CEO has no prior experience in the sector (buying and selling of Gold) Moral Hazard (After hiring): Agent (GoldBod) may take actions that benefit GoldBod, but not BoG.
Theory further states that three main problems arise as a result of the behaviour of GoldBod (Agent) that do not inure to the benefit of the BoG (Principal).
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