Page 68 - SBL Integrated Workbook STUDENT 2018

Chapter 7

Agency Theory

6.1 What is agency theory?

 Agency theory is a group of concepts describing the nature of the
agency relationship deriving from the separation between
ownership and control.

Principal
(Shareholders)

Accountable to
Employs

Agent
On behalf of
(Directors)

To perform

Task
(Managing the
company)

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