AGENCY THEORY: AN APPROACH TO INCENTIVE PROBLEMS IN MANAGEMENT ACCOUNTING
Abstract
There are two problems when a principal invests capital and hires an agent to do the work. The problems relate to inducing the agent to exert the optimal effort and to effect an optimal risk sharing arrangement. This paper introduces the concepts and enumerates the fundamental solutions to this agency problem. This approach is very useful in the managerial accounting area of determining the value of accounting information for setting performance evaluation and incentive payment schemes.
Citation
Ronen, J., Kashi, R. and Balachandran (1995), "AGENCY THEORY: AN APPROACH TO INCENTIVE PROBLEMS IN MANAGEMENT ACCOUNTING", Asian Review of Accounting, Vol. 3 No. 1, pp. 127-151. https://doi.org/10.1108/eb060655
Publisher
:MCB UP Ltd
Copyright © 1995, MCB UP Limited