The dominant theory in corporate governance is ______.

Question

Quizplus · Accepted Answer

Agency theory is the dominant theory in corporate governance which suggests that due to separation of ownership and control in corporations, managers need to be monitored and incentivized to act in the best interest of shareholders. This theory considers the agency problem where managers may prioritize personal interests over those of the shareholders. RBV (Resource-based view) and KBV (Knowledge-based view) are theories related to competitive advantage and not specifically to corporate governance. Marxist theory focuses on class struggle and is not related to corporate governance.

The Dominant Theory in Corporate Governance Is ______