Agency theory addresses disputes that arise primarily in two key areas: A difference in goals or a difference in risk aversion. Management may desire to expand a business into new markets, focusing on the prospect of short-term profitability and elevated compensation. However, this may not sit well with a more risk-averse group of shareholders, who are most concerned with long-term growth of earnings and share price appreciation. There could also be incompatible levels of risk tolerance between a principal and an agent. For example, shareholders in a bank may object that management has set the bar too low on loan approvals, thus taking on too great a risk of defaults.