Meheret, TewodrosYeshitla , Zemere2019-03-072023-11-082019-03-072023-11-082019-01http://etd.aau.edu.et/handle/123456789/16611Agency theory is a popular theory of corporate governance. It contends that in companies with a dispersed ownership structure, there is a separation of ownership and control as the ownership over the assets of the company rests on the shareholders while the managers have control over the assets. This creates a principal-agent relationship between the shareholders and the management. Inherent in any principal-agent relationship is the understanding that the agent will act for and on behalf of the principal. However, agency problem may also arise due to the conflict of interest between the shareholders and the management. In view of this, effective corporate governance mechanisms are imperative in order to prevent or reduce the misappropriation of the shareholders’ investment by the managers. Accordingly, this study is concerned with agency problem between shareholders and management in share companies in Ethiopia. In particular, it submits empirical evidence on the ownership structure of share companies in Ethiopia to show that there is dispersed ownership structure and thus a serious agency problem. In support of this claim, it raises few practical instances of agency conflict witnessed in share companies in Ethiopia and presents the results of interviews conducted. More importantly, the study tries to identify some of the most effective corporate governance mechanisms used to alleviate agency conflicts. Then, it evaluates whether the law and the practice in share companies in Ethiopia adequately incorporates these mechanisms, and finds that there are loopholes in the law as well as the practice. Finally, the study calls for proper legal and institutional reform to be made to address the problemen-UScorporate governance,ownership structure, separation of ownership and controlThesis