In the context of agency theory, agents are more likely than principals to focus on:
A) a long time horizon because they always work for a firm in the long run.
B) a long time horizon because they have less information about the day-to-day business than do principals.
C) a short time horizon because it is usually easier to affect firm performance in the short run.
D) a short time horizon because it is easy for principals to monitor all the decisions made by the agents.

Question

Quizplus · Accepted Answer

Agents often focus on short-term goals because their performance is usually evaluated in the short run, making it easier for them to demonstrate results and potentially benefit from them.

In the Context of Agency Theory, Agents Are More Likely