advanced agency theories

Advanced agency theories analyze the relationship between principals (like owners or shareholders) and agents (such as managers) in organizations, emphasizing complexities beyond basic oversight. These theories explore issues like information asymmetry, where agents often have more knowledge than principals, leading to potential misaligned incentives or conflicts of interest. They also consider mechanisms—like performance-based contracts and monitoring—to align agents' actions with principals' goals. Overall, advanced agency theories provide a nuanced understanding of how organizational structures, incentives, and information flow influence decision-making and prevent misconduct or inefficiency.