Agency Conflicts, Corporate Governance, and the Brazilian Public Service: A Theoretical Essay

Abstract

The Brazilian public service is grounded in laws and rules that, in some cases, result in a situation where the interests of those executing the service diverge from those who commissioned it. Agency theory states that the possibility of hiring and delegating powers to administrators who do not necessarily hold any ownership stake in the company creates a separation between ownership and control, where the interests of the owner — referred to as the principal — do not align with those of the hired managers — the agents. The role of corporate governance is to oversee the relationship between management (agents) and owners (principals) and to reduce the differences between them, especially regarding information asymmetry. This paper, through a theoretical essay, seeks to present, based on the literature, the existing relationships concerning agency theory and corporate governance applied to the public sector and public services. In this context, a solid governance structure becomes advisable for effective administration and management in public sector bodies. It was possible to observe that the principles of corporate governance — namely transparency (disclosure), accountability, and fairness — align closely with the principles of public administration, particularly regarding publicity and morality.