there is a potential agency problem exist in this firm. First of all,he owns only 40% of the firm,but he manages actively all aspects of its activities and the other stockholders are not active inmanagementof the firm, so he is an agent of the other owners. Secondly he is reluctant to take more thanmoderate risk, which might jeopardize his goal of profit maximization and reduce his personalwealth, so thereis a conflict between owner wealth maximization and his personal goals.