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Insider Ownership and "Skin in the Game": Why It Matters for Business Quality

Business Analysis • Beginner Investing • 7 min

This is a different question from tracking individual insider trades: how much of the company do the people actually running it own? The underlying concept is the "principal-agent problem" — professional managers (the agents, hired to run the company) don't automatically act in the best interest of shareholders (the principals, who actually own it), since an agent's personal incentives can diverge from what…

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