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Practice ACCA ACCA BT — Business & Technology Practice Exam 5Question 36

Easy1 markMultiple Choice

Syllabus B: Organisational structure, culture, governance and sustainabilitySyllabus BCorporate Governance

ACCA · Question 36 · Syllabus B: Organisational structure, culture, governance and sustainability

True or False: Agency theory describes the relationship where directors act as agents on behalf of the shareholders (the principals).

Answer options:

True

False

How to approach this question

Identify who owns the company (principals) and who runs it (agents).

Full Answer

A.True✓ Correct

Agency theory explains the relationship between principals (shareholders) and agents (directors/management). Corporate governance exists to ensure agents act in the best interests of the principals, rather than their own self-interest.

Common mistakes

Reversing the roles (thinking directors are principals).

Question 35 All questions Question 37

Practice the full ACCA BT — Business & Technology Practice Exam 5

52 questions · hints · full answers · grading

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