Which of the following concepts provides a framework for analyzing financial reporting incentives between managers and owner?

Question

Quizplus · Accepted Answer

Agency theory provides a framework for analyzing financial reporting incentives between managers and owners because it focuses on the principal-agent relationship between managers (agents) who make decisions on behalf of owners (principals). It examines how conflicts of interest arise between the two parties and what mechanisms can be put in place to align their interests. Signalling theory, information symmetry, and private contracting also play a role in financial reporting, but they do not focus specifically on the managerial incentives and owner relationship.

Which of the Following Concepts Provides a Framework for Analyzing