1. In the context of financial reporting, explain what is meant by agency theory. Include in your answer clear identifications of the agency relationships considered, the mean- ing of the main terminology used in expounding the theory and the implications for financial reporting of the theory.

   [13 marks]

2. b) In the context of financial reporting, explain signalling theory. As part of your answer,

   explain how signalling relates to Akerlofs market for lemons (QJE, 1970). [6 marks]

3. c) What evidence, if any, exists to suggest that the IASB has been subject to regulatory

capture?