Agency theory

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Agency theory

The analysis of principal-agent relationships, in which one person, an agent, acts on behalf of another person, a principal.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
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References in periodicals archive ?
The architecture of virtual human is presented based on agent theory in this paper.
The sentiment has particularly flourished under reforms that increase the federal government's role in education administration by replacing traditional notions of compliance and bureaucratic accountability with the principal agent theory's adaptation of performance accountability.
The studies are conducted under the theoretical framework of Principal Agent Theory.
Partly in response to these developments, several prominent scholars have rejected faithful agent theory and suggested that courts should be understood as cooperative partners of the legislature in the process of statutory interpretation.
Management practices, such as training, e-activities and the formation of strategic alliances are influenced by Transaction Cost Theory, Networking Theory and Principal Agent Theory. Coase (1992) argued in his 1937 article "The Nature of the Firm" that transaction costs from the use of the market mechanism have led to the existence of the firm.
discussed, faithful agent theory seems unlikely to fully explain the
First, drawing on principal agent theory, private ownership provides incentives for the principal (owner) to monitor the agent (manager), because the owner controls and directly reaps profits.
Three interrelated areas are examined in detail: the merits of principal agent theory in explaining China's enterprise reform, the concept of private property rights and the nature of TVEs.
A brief part 3 addresses issues of ethical pluralism, laying out the contours of an ideal agent theory and principles.
She maintains that Republicans reared on the tenets of classical liberalism codified the agent theory used in common law to guard the individual rights of workers in the Transportation Act.

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