Agency theory examines the relationship between the owners of the firm and the managers of the firm.

Name: Agency theory examines the relationship between the owners of the firm and the managers of the firm.
Brand: Quizplus
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Agency theory is focused on analyzing the principal-agent relationship between the owners (or shareholders) of a firm, who are the principals, and the managers, who are the agents. The theory examines how conflicts of interest between these two parties can arise and how to mitigate such conflicts.

Agency Theory Examines the Relationship Between the Owners of the Firm