Agency theory suggests that managers' behavior
A)may be to enhance the owners' financial interests at the expense of their self-interests
B)will always follow classic agency law
C)may not always be in the best interests of the owners (stockholders)
D)as agents will always be in the best interests of the owners (stockholders)

Question

Quizplus · Accepted Answer

Agency theory acknowledges the possibility of divergent interests between the principal (owners/stockholders) and agent (managers). This means that managers' behavior may not always align with the best interests of the owners.

Agency Theory Suggests That Managers' Behavior