In agency theory, incentive is the _____.
A)influence of uncontrollable factors on a manager's performance
B)extent to which a manager's reward depends on a performance measure
C)relationship between cost and perceived benefit
D)relationship between goal congruence and managerial effort

Question

Quizplus · Accepted Answer

In agency theory, incentives refer to the extent to which a manager's reward is tied to a performance measure, such as achieving certain goals or meeting certain targets. This is seen as a way to align the interests of the manager with those of the company or owner, and to motivate the manager to work towards achieving those goals.  Options A, C, and D do not accurately reflect the definition of incentive in agency theory.

In Agency Theory, Incentive Is the _____