According to agency theory, the firm is viewed as a(n)
A) unified, profit-maximizing entity.
B) task force organization that must respond to rapidly changing environments.
C) entrepreneurial endeavor.
D) "nexus of contracts" among self-interested individuals.

Question

Quizplus · Accepted Answer

Agency theory views the firm as a "nexus of contracts" among self-interested individuals, where each individual (or "agent") has their own goals and objectives. The theory suggests that conflicts may arise between the agents and the principal (usually the owner of the firm) because their interests may not always align.

According to Agency Theory, the Firm Is Viewed as A(n)