agency theory

Definition |

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A theory explaining the relationship between principals, such as a shareholders, and agents, such as a company's executives. In this relationship the principal delegates or hires an agent to perform work. The theory attempts to deal with two specific problems: first, that the goals of the principal and agent are not in conflict (agency problem), and second, that the principal and agent reconcile different tolerances for risk.

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The agency theory was something we felt was important to us and everyone else felt the same way about it.

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The agency theory conflict of the incentives involved in the people's minds that were making the decisions clouded the issue.

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According to the agency theory, the delegation of certain tasks to other parties is beneficial to shareholders and the administration alike.

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