Temesgen Worku (PhD)Sebsiba Kiros Beyene2025-03-042025-03-042023-12-15https://etd.aau.edu.et/handle/123456789/4439The primary goal of this study was to evaluate how incentive scheme impact in reducing agency costs within organizations. It sought to understand the root causes of agency costs and the effectiveness of incentive schemes in diminishing the conflict of interest between the principal and agent that creates agency cost. Data was gathered through a questionnaire, with the first section focusing on demographic details and the second section addressing questions related to the causes and effects of agency costs. Analysis was conducted using an ordinal scale, organizing responses numerically. The results underscored the significance of agency problems in generating agency costs and demonstrated the positive influence of incentive schemes in addressing them. The study advocates for the implementation of diverse incentive structures encompassing both intrinsic and extrinsic motivators. Additionally, it suggests enhancing the ownership stake of managerial personnel to effectively tackle agency costs within organizational setups.enThesis