The Theory of the Firm attempts to explain how and why corporations exist. In its simplest form, corporations exist to maximize profits. As the economy grows increasingly complex, so have corporations.

How should the Theory of the Firm and Agency Costs impact our decision-making? Discuss agency problems with the help of some real-life examples (eg. Enron or Xerox Corporation). Read and reflect upon them. You may wish to do some research of your own. Make sure you support your statements.

reference:

Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure

Journal of Financial Economics, October 1976, V. 3,