References: Anderson‚ E. (1985) The salesperson as outside agent of employee: A transaction cost analysis. Marketing Science‚ 4‚ 234-254. Amihud‚ Y.‚ & Lev‚ B. (1981) Risk reduction as a managerial motive for conglomerate mergers. Bell Journal of Economics‚ 12‚ 605-616. Argawal‚ A.‚ & Mandelker‚ G. (1987) Managerial
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AGENCY THEORY AND ACCOUNTING CHOICE: ISSUES AND HALLENGES BY OMEJI IKECHUKWU MAT NO MGS0803060 DEPARTMENT OF ACCOUNTING FACULTY OF MANAGEMENT SCIENCES UNIVERSITY OF BENIN‚ BENIN-CITY‚ EDO STATE‚ NIGERIA. OCTOBER‚ 2012. AGENCY THEORY AND ACCOUNTING CHOICE: ISSUES AND HALLENGES BY OMEJI IKECHUKWU MAT NO MGS0803060 DEPARTMENT OF ACCOUNTING FACULTY OF MANAGEMENT
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functioning. Its purpose is to attain the main goal of the organization and managing relationships between the board of directors and shareholders‚ which is basically between the management and the stakeholders. It concentrates on reducing the principal-agent problem in the organization. Good corporate finance is essential in ensuring that companies maintain a strong position in the market especially when they are competitive and deserve an efficient investment environment. Over the years‚ corporate
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profits only if it is subject to the possibility of being lost. Investopedia - Risk-Return Tradeoff. (2014). Retrieved from http://www.investopedia.com/terms/r/riskreturntradeoff.asp Agency (principal and agent problems) Conflicts of interest and moral hazard issues that arise when a principal hires an agent to perform specific duties
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interests give rise to conflicts of interest between contracting partners. These conflicts of interest may result in turn‚ in one or both parties undertaking actions that may be against the interest of the other contracting partner. The primary reason for the divergence of objectives between managers and shareholders has been attributed to separation of ownership (shareholders) and control (management) in corporations. As a consequence‚ agency problems or principal-agent conflicts exist in the firm.
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Chapter 1: Problem 2. Explain several dimensions of the shareholder-principal conflict with manager agents known as the principal-agent problem. To mitigate agency problems between senior executives and shareholders‚ should the compensation committee of the board devote more to executive salary and bonus (cash compensation) or more to long-term incentives? Why? What role does each type of pay play in motivating managers? The compensation committee should devote more to long-term incentives for
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“Culture eats strategy for lunch!” This is how Peter Drucker sarcastically describes the importance of the strategy for a company and how employees will make or change this strategy in order to create a culture that fits with the company’s growth. Two different perspectives regarding the growing of the family businesses over the years and remaining innovative are communicated with the psychiatrist Professor Fritz B. Simon and the economist Professor Benoit Leleux. According to the Professor Fritz
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the more recent literature on corruption as a principal-agent problem whose significance for development depends on its dimensions related to the nature of the corrupt transaction itself‚ such as distinctions based on the agents involved‚ scale‚ type of deal‚ predictability‚ industrial organisation‚ etc.‚ all of which affect for better or worse the nature of the relationship between principal (as represented by the public interest) and the agent (politicians and bureaucrats). From this viewpoint
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stockholders and management is called an agency relationship. Such a relationship exists whenever someone (the principal) hires another (the agent) to represent his/her interests. For example‚ you might hire someone (an agent) to sell a car that you own while you are away at school. In all such relationships‚ there is a possibility of a conflict of interest between the principal and the agent. Such a conflict is called an agency problem. Suppose you hire someone to sell your car and you agree to pay that person
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Reality Check and the Limits of Principal Agent Theory Arie Halachmi‚ PhD 2011-2011 Distinguished Fulbright Professor Abstract Can partnership and contracting out of the production and delivery of what used to be performed by government improve public sector productivity? However‚ the reality does not always follow the theory. Using an actual case study and a Principal Agent Theory the paper explores and articulates possible limitations of Principal Agent Theory and some issues and possible
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