What is agency theory in literature?
2.1 Agency Theory. Schroeder & Clark (1995) defined an agency as relationship by consent between two parties, whereby one party (agent) agrees to act on behalf of the other party (principal).
What is agency theory in MIS?
Agency theory suggests that end-users will desire greater autonomy over their computing in order to avoid the agency costs that arise in traditional MIS development.
Why is agency theory important?
Agency theory is one of the most important developments in microeconomics in the past 20 years. It has application to accounting, industrial organization, and labor economics, and it has become the basis of the economic model of compensation. Agency studies incentives, risk, and selection of employees.
What is agency theories and issues?
Agency theory is a principle that is used to explain and resolve issues in the relationship between business principals and their agents. Most commonly, that relationship is the one between shareholders, as principals, and company executives, as agents.
What is the aim of agency theory?
Agency theory attempts to explain and resolve disputes over the respective priorities between principals and their agents. Principals rely on agents to execute certain transactions, which results in a difference in agreement on priorities and methods.
What are the features of agency theory?
Agency theory addresses disputes that arise primarily in two key areas: A difference in goals or a difference in risk aversion. Management may desire to expand a business into new markets, focusing on the prospect of short-term profitability and elevated compensation.
What are the key concepts of agency theory?
Key concepts of agency theory An agent is employed by a principal to carry out a task on their behalf. Agency refers to the relationship between a principal and their agent. Agency costs are incurred by principals in monitoring agency behaviour because of a lack of trust in the good faith of agents.