Skip to content

CMA Foundation · Fundamentals of Business Economics and Management · Stewardship Theory and Agency Theory of Management

Which of the following is an assumption of stewardship theory rather than of agency theory?

The assumption that managers' personal goals can be aligned with organisational goals belongs to stewardship theory. It sees stewards gaining satisfaction from organisational success. Conflict of interest, monitoring and incentive contracts, and moral hazard from information asymmetry are agency theory ideas.

  1. AInterests of principal and agent inevitably conflict
  2. BManagers must be controlled through monitoring and incentive contracts
  3. CManagers' personal goals can be aligned with organisational goalsCorrect
  4. DInformation asymmetry leads to moral hazard

Explanation

Stewardship theory assumes that the steward's utility is maximised by achieving organisational goals, so interests align. Conflict of interest, control mechanisms, and moral hazard arising from information asymmetry are core ideas of agency theory.

Did you get it right without looking?

One question tells you little. A timed set on Stewardship Theory and Agency Theory of Management shows your real accuracy, how long you take and where you lose marks.

Practise Stewardship Theory and Agency Theory of ManagementFree diagnostic mock

More Stewardship Theory and Agency Theory of Management questions