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agency theory is to help devise techniques for describing the conflict inherent in the principal-agent relationship and controlling the situations so that the agent, acting from self-interest, does as little harm as possible to the principal's interest

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14y ago

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Agency theory describes the relationship between principals (such as shareholders) and agents (such as managers) in organizations. It focuses on potential conflicts of interest that may arise when agents make decisions on behalf of principals and suggests mechanisms to align the interests of the two parties. The theory aims to address issues of agency cost, control, and monitoring to ensure that agents act in the best interests of the principals.

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10mo ago
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Q: How has the agency theory been described?
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