Asked by Hannah Crenshaw on Jun 19, 2024
Verified
In the context of agency theory, agents are more likely than principals to focus on:
A) a long time horizon because they always work for a firm in the long run.
B) a long time horizon because they have less information about the day-to-day business than do principals.
C) a short time horizon because it is usually easier to affect firm performance in the short run.
D) a short time horizon because it is easy for principals to monitor all the decisions made by the agents.
Agency Theory
A principle that describes the relationship between principals (such as shareholders) and agents (such as company executives), focusing on the contracts and costs involved in resolving conflicts of interest.
Principals
Individuals or entities that own, govern, or have significant authority within an organization or operation.
Time Horizon
The length of time over which an investment, project, or policy is contemplated or expected to be effective or profitable.
- Recognize the implications of agency theory for organizational behavior and management.
Verified Answer
Learning Objectives
- Recognize the implications of agency theory for organizational behavior and management.
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