In agency theory, _____ is a primary mechanism used by both parties to maintain and govern the relationship.
A) autonomy
B) motivation
C) self-regulation
D) monitoring

Question

Quizplus · Accepted Answer

Monitoring is a primary mechanism used by both parties in agency theory to maintain and govern the relationship. It involves the principal (employer) overseeing the actions and decisions of the agent (employee) to ensure they align with the principal's interests. Monitoring can take various forms, including performance evaluation, regular reporting, and direct observation. Effective monitoring helps mitigate the risk of the agent shirking their responsibilities or engaging in opportunistic behavior, which can harm the principal's financial and reputational interests.

In Agency Theory, _____ Is a Primary Mechanism Used by Both