Define What Constitutes an Agency Relationship and the Roles of the Principal

question 97

Essay

Define what constitutes an agency relationship and the roles of the principal and the agent; discuss how the agency relationship is reflected in the context of corporate diversification and when the agency relationship can be effective; and identify two common agency problems.

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Definitions:

Legal Standards

Established norms and criteria in the legal system that actions and decisions must adhere to.

Moral Standards

Principles of right and wrong that are accepted by an individual or a social group.

Ethical Standards

A set of principles designed to guide behavior and decisions in a professional and personal context, based on notions of right and wrong, fairness, honesty, and integrity.

Data Collection

The process of gathering and measuring information on variables of interest in an organized manner.