What’s Wrong With Agency Theory?

  • Alexander Pepper


This chapter begins by describing the standard model of the firm in organisational economics. It continues by providing a critique of the main premises on which the standard model is based: that shareholders own firms and directors are their agents; that agency costs arise at the level of the firm because of the different interests of shareholders and managers; that man is rational, self-interested, and rent-seeking and there is no non-pecuniary agent motivation. A case study of AstraZeneca is used to illustrate some of the points.


Theory of the firm Agency theory Shareholder primacy Stakeholder theory 


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© The Author(s) 2019

Authors and Affiliations

  • Alexander Pepper
    • 1
  1. 1.Department of ManagementLondon School of Economics and Political ScienceLondonUK

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