The agency theory attempts to explain and resolve disputes about the respective priorities between principals and their agents.
Principals rely on agents to complete certain transactions, resulting in a difference in priority and method agreement.
The difference in priorities and interests between agents and principals is known as the principal-agent problem.
Resolving differences in expectations is called “reducing agency losses”.
Performance-based compensation is one of the ways that is used to achieve a balance between the principal and the agent.
The general relationship between principal and agent includes shareholders and management, financial planners and their clients, and tenants and landlords.
Evaluation costs are the fees a company pays for discovering defects in its products before they are delivered to customers; they are a form of quality control.
The articles of association can be seen as a user manual for the company, defining its purpose and outlining the methodology for carrying out the necessary day-to-day tasks.
When a company or government agency buys or leases existing manufacturing facilities to launch new manufacturing activities, this is called an investment in existing facilities.
The Code of Ethics sets out the ethical principles of the organization and the best practices to be followed with respect to honesty, integrity and professionalism.