As mergers, acquisitions, and restructuring have increased in importance, agency theory has become more important in assessing whether
A)a stock repurchase should be undertaken.
B)shareholder goals are truly being achieved by managers in the long run.
C)managers are actually agents or only employees of the firm.
D)managers and owners are actually the same people with the same interests.

Question

Quizplus · Accepted Answer

Agency theory is concerned with aligning the interests of managers (agents) with those of shareholders (principals) to ensure that shareholder goals are truly being achieved by managers in the long run. As mergers, acquisitions, and restructuring often involve significant financial and strategic decisions, shareholder interests must be taken into account to avoid agency problems.

As Mergers, Acquisitions, and Restructuring Have Increased in Importance, Agency