The Changes of Agency Costs in the Life Cycle of Enterprises

This research concentrates on the variations of agency costs throughout the enterprise life cycle.In the start-up phase, managers, employees, and shareholders are frequently integrated, with relatively equitable equity distribution.When confronted with survival pressures, teamwork is robust, and agency costs are not of primary concern.The infusion of investment and the anticipation of going public maintain employee enthusiasm, keeping the costs within an acceptable range.After going public, employees' mentalities shift upon achieving wealth goals, their drive to strive diminishes, enterprise cohesion wanes, and agency costs soar.As the core business matures, enterprises are liable to fall into a "resource trap", restricting the expansion of new ventures and influencing employee motivation and agency costs.Although society can optimize the industrial structure through enterprise metabolism, the costs are substantial; internal governance mechanisms can merely alleviate the issues; corporate mergers and acquisitions prove ineffective in resolving agency cost problems in practice.ESOP 100% shareholding is an efficacious approach to tackling the agency problem.