The prominent financial economists Michael Jensen and Stephen Ross played leading roles in the development of agency theory. (See, e.g., Jensen and Meckling 1976; Ross 1973.) The theory posited that agents (in this context, managers) could be relied upon only to pursue their own interests, not those of their principals (the stockholders). The solution was thus to design contracts in such a way that managers would maximize their rewards by doing what was in their principals' interest. Consultants seized on agency theory in particular on an article in the Haraard Business Review Jensen and Murphy 1990) that called for tighter links between managers' performance and their rewards and drew from it the lesson that alignment of interests could be achieved by making a larger proportion of managers' rewards take the form of the stock of the corporations they managed or options to buy that stock (Lowenstein 2004, pp. 13-21). To the extent that rewards geared to stock prices fueled the managerial deceit and wrongdoing of the 1990s and early 2000s, agency theory might be seen as having a perverse performative effect: forms of reward based on the agency-theory presumption that managers would pursue their own self-interest without scruples may have helped to generate a context in which managers did just that.

Donald MacKenzie, An Engine, Not a Camera, loc. 1639