Agency theory deals with the issue of
Answer when to hire an agent to represent the firm in negotiations.
the legal liabilities of a firm if an employee, acting as the firm's
agent, injures someone.
the limitations placed on an employee acting as the firm's agent to
obligate or bind the firm.
the conflicts that can arise between the viewpoints and motivations of a
firm's owners and managers.
Well, agency theory is like the comedic balancing act between a firm and its agents. It's all about navigating the conflicts between the desires of the firm's owners and managers. It's like a clown juggling the interests of all parties involved, making sure nobody gets hit in the face with a pie. So, the answer is the conflicts that can arise between the viewpoints and motivations of a firm's owners and managers. Let's hope they don't slip on a banana peel while negotiating!
The correct answer is: the conflicts that can arise between the viewpoints and motivations of a firm's owners and managers.
The correct answer is: the conflicts that can arise between the viewpoints and motivations of a firm's owners and managers.
To arrive at this answer, we need to understand what agency theory is and what it focuses on. Agency theory is a branch of economics that explores the relationships and conflicts that can arise between agents and principals. In this context, the principal is the owner of a business or organization, while the agent is the manager or employee who acts on behalf of the principal.
The primary concern of agency theory is the potential conflicts of interest that can occur between owners (principals) and managers (agents). Owners typically seek to maximize their wealth and value, while managers may have their own motivations and goals, which may not necessarily align with those of the owners. These conflicts can lead to agency problems, such as managers prioritizing their own interests or not acting in the best interest of the owners.
Therefore, agency theory deals with examining and understanding these conflicts and proposing mechanisms or solutions to align the interests of principals and agents. It aims to minimize conflicts and ensure that managers act in the best interest of the owners.
In the answer choices provided, only "the conflicts that can arise between the viewpoints and motivations of a firm's owners and managers" aligns with the concept of agency theory. The other answer choices relate to different aspects of agency relationships, but do not quite capture the central focus of agency theory.