Which one of the following theory of corporate governance focuses on the principal-agent conflict,…
Developed by Jensen and Meckling (1976), Agency Theory in corporate governance analyzes the principal-agent relationship between shareholders (principals) and professional…
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Which one of the following theory of corporate governance focuses on the principal-agent conflict, where managers may prioritize their own interests over those of shareholders, thereby necessitating monitoring, incentives, and control mechanism ?
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Correct answer B
Developed by Jensen and Meckling (1976), Agency Theory in corporate governance analyzes the principal-agent relationship between shareholders (principals) and professional managers (agents), emphasizing how divergent self-interests create agency costs that require board monitoring, performance incentives, and governance controls.
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UGC NET Management