It seem that the agency problem has been prevalent in corporate America and there have been many examples of companies and their executives being engaged in unethical, and sometimes illegal behaviours. In facts, the interests of principals and agents are not the same; agents (senior executives) are motivated by desires for stars, power and income. A study from 2010 evaluated the relationship between the performance of CEOs and their pay, no relationship has been found. In addition the studies, there many companies such as Hollinger, Enron, WorldCom, HealthSouth and many other that have experiences serious financial and legal problems as a result of self-interest-seeking executives. Nevertheless, in recent years many principals have implanted comprehensive measurement and control systems in order to reduce the scope and frequency of the problem and thus, to align their interest with the interest of the agents.
Who benefited the most from the late 1990s boom in initial public offerings of Internet companies: investors (stockholders) in those companies, managers, or investment banker?
I think that investment bankers and investors benefited the most from the boom in late 1990s. First of all, investment bankers provide services and guide the companies that want to go public. Investment bankers charge a fee for their assistance, therefore, they benefited the most from the boom in IPOs of Internet companies. Simply put, a high number of companies using their services to go pubic created large revenue for investment banks. In regards to the investor, the level of benefits gained from the boom was hugely depended on the time of their investment. Those who managed to buy initial public offerings and sell them before the market collapse, definitely earned high profits. Those who didn't sell the stock before the market collapse and the price drop, might have experienced losses.