Agency theory

Agency theory

The analysis of principal-agent relationships, in which one person, an agent, acts on behalf of another person, a principal.

Agency Theory

The study of the relationship between an agent (such as a broker) and a principal (such as a client). Agency theory seeks to explain the relationship in order to recommend the appropriate incentives for both parties to behave the same way, or more specifically, for the agent to have the incentive to follow the principal's direction. Agency theory also seeks to reduce costs in disagreements between the two.
References in periodicals archive ?
In family-run businesses, the financial interests of the owners of the firm (known as 'principals' in the agency theory of the firm) and the individuals who occupy major managerial and staff positions in the company (many of whom bear the same surname as the companies' founders) are closely intertwined.
While agency theory applied to mergers and acquisitions is not an entirely new line of research (Jensen, 1986; Shleifer and Vishny, 1991; Devineetal, 2016), this paper will attempt to answer the following research question, which has not, to date, been adequately addressed.
This insight became the basis and motivation for the work of Jensen and Meckling (1976) that resulted in abundant research work on corporate financing, in the context of agency theory. Within the principal-agent framework, the agency theory predicts that the agent tries to benefit from firm's resources and consequently the firm incurs cost which eventually reduces the firm value.
The civilians' "right to be wrong," central to Feaver's agency theory, does not give sufficient weight to the moral content of decisions that spend the lives of soldiers and on which military officers are likely to have important insight.
AGENCY theory is part of the topic of corporate governance.
I apply agency theory to Thailand, testing three different hypotheses derived from the theory.
Agency theory is the primary theoretic lens through which executive compensation and corporate governance issues are examined (Dalton, Hitt, Certo, & Dalton, 2007; Devers, Cannella, Reilly, & Yoder, 2007; Eisenhardt, 1989).
In this section, we begin with the definitions of the terms used in the research, the agency theory, as well as the literature review which looks at the empirical evidence of the relationships between FDI, property structure and their effects on the performance of the business group.
He also named the landlord's wife as a defendant under a common business venture agency theory of liabilityin other words, she profited from her husband's business.<br />After receiving notice of the suit, the landlord transferred the properties he owned into his wife's name and his name, which would have prevented the boy's family from collecting a judgment that was solely against the landlord, Woodyard said.<br />He added that the landlord also sold the residence where the attack occurred and put several other properties up for sale.
However, according to the agency theory, the nature of agency conflict between principal and agent determines the quality of accounting information.
The theory used is agency theory. The shareholders will hand over the right of decision making to the management as they need to fulfill the best interest of the shareholders and there might be conflict of interest facing by the management.
Using the human agency theory, he shows that through all this, Malawian labor migrants make rational and informed decisions about whether to emigrate or not.