Which of the following statements about agency theory is true?
A) Accounting information is viewed as something that is 'right'.
B) Conflicts of interest are regarded as unnatural.
C) It tends to focus on the future-oriented,decision-making role of accounting information.
D) It is concerned with contractual relationships among people.

Question

Quizplus · Accepted Answer

Agency theory is concerned with the contractual relationships among people, particularly the relationship between principals and agents. This theory assumes that conflicts of interest are natural and it focuses on aligning the interests of principals and agents to improve organizational performance. Accounting information is seen as a means to monitor and control the actions of agents. The theory is not necessarily oriented towards the future or decision-making, although it can be applied to these areas. The view of accounting information as 'right' is not a feature of agency theory.

Which of the Following Statements About Agency Theory Is True