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

Why this matters here

Jensen and Meckling’s 1976 theory of the firm analyzes agency costs when ownership and control separate—managers optimizing local objectives that need not align with principals’ interests. Coupling extends that layered optimization to risk systems where each metric layer sees only part of the structure while consequence accumulates underneath. The paper theorizes agency and ownership; the book asks when local metrics look coordinated while feedback returns too slowly to educate judgment.