The following quote is from Adam Smith, The Wealth of Nations, 1776. The directors of such [joint-stock] companies, however, being the managers rather of other peoples money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private [partnership] frequently watch over their own. Clearly, the agency problem was well known 250 years ago. What is the agency problem and what does modern agency theory have to say about it?