Answer: conflicts that arise in corporations should be addressed in the legal realm(A)
Explanation:
The principal-agent problem is an important part of the agency theory, the principal-agent problem views the firm as a connection of legal contracts.
In this perspective, corporations are seen merely as set of legal contracts that exists between the different parties. The conflicts that may take place are to be addressed in the legal realm.
Answer:
A. conflicts that arise in corporations should be addressed in the legal realm
Explanation:
Agency Theory: It is used to describe the relationship between an "agent" and a "principal". It can also be used to explain the relationship between an agent and a principal.
An agent refers to an individual who performs certain task or functions on behalf of another Individual (principal).
A principal is a Individual who assigns a particular task to be performed by him/her to another person.
Agency theory helps to understand the relationship between agents and principals. The agent is expected to represent the principal's interest in whatever duty is assigned to them. If the agent act contrary to the principal's interest, it might lead to principal-agent problem.
