Agency Theory defines the relationships between principals (e.g., shareholders) and agents (e.g., company executives and managers). The shareholders, as the principals, employ the agents to manage the company and expect them to act in the best interest of the principals. However, agency conflicts arise when the agents do not act in alignment with the shareholders’ interests, often prioritising their own personal goals or gains. These conflicts result in agency costs, which represent a loss in shareholder value.

By remaining actively involved in the management of TCWL as a former CEO and current Board Chairman, Mr. Asare Blankson can minimise or avoid several potential agency conflicts:

1. Moral Hazard

Moral hazard refers to situations where managers may take excessive risks because they do not bear the full consequences of their actions. Mr. Blankson’s direct involvement can reduce this conflict because, as both the owner and an active manager, he bears the full consequences of any poor decisions. This reduces the likelihood of reckless risk-taking by management.

2. Excessive Perks and Compensation

Managers often award themselves excessive perks and compensation at the expense of shareholders. However, as Mr. Blankson is both the sole shareholder and actively involved in the company’s management, he can avoid the dilution of value that might occur through the overcompensation of managers, thereby protecting shareholder value.

3. Short-Term Focus Over Long-Term Value

Managers may be tempted to prioritise short-term gains, such as focusing on quarterly results, at the expense of long-term shareholder value. Since Mr. Blankson is both a shareholder and part of the management, he is incentivised to focus on long-term growth and sustainability rather than just short-term profits, minimising this agency conflict.

4. Management Entrenchment

When managers have too much control, they may resist necessary changes to protect their own positions, even if it is against the best interests of shareholders. Since Mr. Blankson is directly involved in both management and governance as the Board Chairman, he is in a better position to initiate and implement necessary changes without resistance from entrenched management.

5. Conflict of Interest in Decision-Making

Managers may engage in self-serving decisions that benefit them personally but harm shareholders, such as entering into transactions with related parties or engaging in activities that personally enrich them. Mr. Blankson’s involvement ensures that decisions made are aligned with his own interests as the sole shareholder, thereby reducing conflicts of interest in corporate decision-making.

By being actively involved in the management of TCWL, Mr. Asare Blankson significantly reduces these potential conflicts and ensures that the company is managed in alignment with shareholder interests.