Question 2 (15 marks) a) Agency theory is a management and economic theory that attempts to explain relationships and self-interest in business organisations. It describes the relationship between principals/agents and delegation of control. It explains how best to organise relationships in which one party (principal) determines the work and which another party (agent) performs or makes decisions on behalf of the principal (Jensen and Meckling, 1976; Schroeder et al., 2011). Discuss. (10 marks) b) Explain how far managerial incentive schemes based on share options and profit targets ensure that managers pursue the goal of maximising shareholder wealth. (5 marks)