Purchase Solution

What is Agency Theory?

Not what you're looking for?

Ask Custom Question

Please help me add an example of an agency problem from a real-life lawsuit or situation.

What is 'agency theory'?

Agency Theory is the theory that describes the relationship between two parties in either the corporate or political world. In business, we say that employees of the company act as "agents" of owners, or shareholders, or the company. Often, we talk about an "agency problem" when the interests of employees are not the same as the shareholders. For example, executives paying themselves inflated salaries and large bonuses, while their company fails and the stock price plummets.

Thank you for your help with this!!

Purchase this Solution

Solution Summary

Please help me add an example of an agency problem from a real-life lawsuit or situation.

Solution Preview

In a real life publishing company, agency theory comes into play as advertising is sold. The sales people obtain commission from the number of ads sold. However, the company only grows if customers are happy, obtain ...

Purchase this Solution


Free BrainMass Quizzes
Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Social Media: Pinterest

This quiz introduces basic concepts of Pinterest social media

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Basics of corporate finance

These questions will test you on your knowledge of finance.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.