Describe the Agency Theory as It Applies to Managerial Compensation

question 67

Essay

Describe the agency theory as it applies to managerial compensation.Differentiate between outcome-based contracting schemes and behaviour-based schemes.

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Definitions:

Planned Behavior

A theory that predicts individuals' behavior based on their intentions, attitudes towards the behavior, subjective norms, and perceived behavioral control.

Theory of Planned Behavior

This theory posits that human behavior is guided by three kinds of considerations: behavioral beliefs, normative beliefs, and control beliefs.

Theory of Reasoned Action

A psychological theory that explains the relationship between attitudes and behaviors within human action, suggesting that behavioral intentions are influenced by personal attitudes and the subjective norms surrounding an action.

Effort Justification

is a concept in social psychology that explains why people tend to assign greater value to outcomes they've worked hard to achieve.