Agency Theory

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The Supremes:

Wendy Banjo
Latangela Kendrick
Chansidy Mathis
Stacy Williams

February 16, 2012

Summarization of Article:

Angel Agents: Agency Theory Reconsidered

Financial Management/Cohort BB320

Shorter University

Dr. Gerald Sullivan

AGENCY THEORY

“Angel Agents: Agency Theory Reconsidered” is an article that explores the relationship between agents and company owners. The article opens by stating the premise that company executives, who fail to operate under the every single objective of owners, don’t have the company’s best interest at heart. But the writers refute this by arguing that executives at times can be more engaging than the owners themselves; and for that reasons could make the best decisions for stakeholders. The writers pose a different spin on the Agency Theory, which holds that unless carefully monitor company executives will use information to exploit owners. The article tries to dispel the idea that agents are opportunistic but rather show ways that owners exhibit their greedy ways. The author offer examples like family owners appropriate company funds for family benefit and when poor investments by owners cause company down-sizing or acquiring. As a result CEOs are sometimes influenced by powerful owners. So in an effort to reconsider how agents can receive a more favorable or lighter view; the writers expound on the pressures that agents operate under. The article notes how executives are majorly blame for any failures a company may experience. Furthermore, the executives position are emphasis by stating the it is virtually impossible for executives to behave appropriately, if directed poorly by owners. Writers take a look in retrospect at the “Renault Case” that deals executive Pierre Lefaucheux’s action has a company executive. In an effort to work toward his vision of created an affordable people’s car, he went up against company owners and the government and refuse to turnover company profits. Instead he...
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