Agency theory suggests that managers(the agents), particularly those of large , publically-owned firms, may have different objectives from those of the:
Correct answer: C. Shareholders
- A. Workers
- B. Subordinates
- C. Shareholders
- D. Employees
Explanation
Agency theory focuses on the conflict between managers who control the firm and shareholders who own it. Managers may pursue personal goals that differ from shareholders’ wealth-maximization objective.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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