Within a ﬁrm, managers are the principals, hired on behalf of the shareholders who are the agents.

Name: Within a ﬁrm, managers are the principals, hired on behalf of the shareholders who are the agents.
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In the principal-agent relationship within a firm, the shareholders are the principals and the managers are the agents. The principals (shareholders) own the firm and delegate decision-making authority to the agents (managers) to run the company on their behalf.

Within a ﬁRm, Managers Are the Principals, Hired on Behalf