J&M defines the agency relationship in a very special case of principal (outside

Question

J&M defines the agency relationship in a very special case of principal (outside equity holders) and agent (owner-manager) that does not fit perfectly for the contemporary relationship between shareholders and managers. But, we can always gain some implications from the principal-agent relationship to the current system.  Why would the sole owner sell his/her shares in the first place, when the total value of firm decreases (nobody wants to buy the share at the price where owner expects to sell or market failure)?

Explanation / Answer

sole owner sell his/her shares in the first place, when the total value of firm decreases because:

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