Question

Evaluate the following statements about Agency Theory and its practical relevance to corporate governance: I. Agency Theory, associated with Jensen and Meckling (1976), describes the conflict that arises when a principal (such as shareholders) delegates decision-making authority to an agent (such as company managers)  and the agent may act in their own self-interest rather than in the principal’s interest, creating an ‘agency problem’. II. SEBI’s Listing Obligations and Disclosure Requirements (LOD

  • R Regulations require listed companies to have at least one-third independent directors; where the chairperson is an executive or where there is no regular non-executive chairperson, at least half the board must be independent  directly addressing the agency problem between promoters/management and minority shareholders by ensuring independent oversight. Which of the above is/are correct?
A Only I
B Both I and II
C Only II
D Neither I nor II
E I is correct; II applies only to public sector companies
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