Essays on Agency Theory

The role of executive coaching is becoming an important practice in management development. Executive coaching involves the relationship between clients, coaches and the organization. The most important role of executive coaching is improving the professional human functioning and success in organizations. The role is also viewed as a form of partnership between a client at the management level and a coach employed by an organization to help the executive become a more successful and effective manager (Hannafey & Vitulano, 2013). There have been few considerations about the ethical issues concerning the role such as potential conflicts of interest, confidentiality, professional ...

Foundation Course – Name

Abstract Information technologies are the core components of any organizational studies. Since this phenomenon was introduced into organizational processes, it brought numerous advantages. Incorporation of information technologies into existing business environment has become an indispensable necessity of modern reality due to an ability of informational systems to grant a broad spectrum of opportunities and benefits. Maximization of efficiency, improved services, enhanced manufacturing capacities and supply chain lead to the industry’s growth and economic prosperity. This could hardly be possible without the new information and technological determinants, implemented to control and speed up the everyday business routines. Eventually, information ...

The following paper will be a review on the article, “Ethics and Executive Coaching: An Agency Theory Approach.” A summary of the article will be followed by a personal review and critique. Finally in conclusion a statement will be included as to whether this article was informative on the subject matter or not. Executives today, struggle with a multitude of decisions to make on a daily basis. Organizations require that their executives make top quality decisions throughout each day. Business has become more and more complicated and organizations often seek out assistance for their top executives. Executive coaches are ...

Introduction

Control refers to the management function that entails the entirety of processes that effectively inform the manager of up-to-date events in main areas of operations in the organization, as well as facilitate needed changes to be carried out in the organization (Armesh, Salarzehi, & Kord 2010). Through the control process, projected results are achieved through accurate measurement and positive courses of action. Managers are an indispensable part of the control process in the organization; they check and assess the success of relations between stakeholders, such as employees and customers and organization resources and outcomes - inputs and outputs (Siska 2015). ...

Analysis of an Article about Compensation

Business Analysis of an Article about Compensation Davis, DeBode, and Ketchen (2013) have articulated various management theories that have a bearing on CEO compensation. How much and in what manner to pay a CEO is arguably one of the most important decisions a Board of Directors has to make. The decision would convey strong signals to the external as well as internal environment. Competing firms and the industry would be likely to benchmark the CEO’s compensation to their own. Shareholders would be keen to assess how the CEO compensation translates to a return on their investment in the ...

Agency Problems

1. The agency theory is a supposition that tries to develop an explanation for the relationship that exists between principals and agents in a business (Pfeffer and Salancik, 2003). Normally, agency theory involves developing solutions to the problems that might exist in agency relationships, such as problems between the principals and agents of the principals. One aspect of agency theory is separation ownership. The relationship developed between the owners of the company (shareholders) and the agent (directors) in a company creates a separation in the ownership and control of the company. Major companies such as the ones listed in ...

Question 1.1

Agency is the binding, legal relationship that is created when the agent, acting under the authority of the principal, acts on the principal’s behalf before third parties. Pursuant to agency principles, if the agent commits a tort against a third party while acting under the principal’s authority, the principal will be liable for the agent’s tortuous conduct. Similarly, if the agent, acting under the principal’s authority, enters into a contract with a third party on the principal’s behalf, the principal will be liable for the terms of the contract. There are different kinds of ...

Financialization is the process by which financial institutions increase in size and influence on the overall economy by strengthening the country’s financial sector. The process occurs in countries that are perceived to have shifted their economies from industrial capitalism. It has been occurring in the United States and other parts of the world since the 1970s. The process has affected both the macro economy and the micro-economy by changing the manner in which financial institutions are structured and operate in the entire economy. The United States has experienced high levels of financialization through the loss of manufacturing and ...

Introduction

The report presents discussion and analysis of compensation strategies of Nucor Corporation. The organizational structure significantly impacts the compensation system of an organization that affects its ability to attain strategic goals. If the compensation to executives is not aligned with the organizational culture then it may lead to adverse impact on the firm’s performance and lead to other consequences. Several studies indicate that the organizational culture has a significant impact on compensation as well as the firm’s performance. The firms offer different types of compensation to their executives that may affect the compensation structure. However, they are ...

Introduction

The corporate governance is the mechanisms that involve the rules, processes and the practices to which an organization is directed and controlled. Therefore, it is a process of balancing the interests of many stakeholders in an organization, which mainly includes the customers, financers, management, suppliers and the community. It provides the foundation and framework for achieving the company goals and objectives, and it looks at every part of the management including their actions, performance measure and corporate disclosure. It is a field in economics that investigates on how to motivate and secure the efficient administration of the corporations by ...

Supply chain management is a term that is used in order to describe the activities associated with logistics, control and planning of the materials and it is also used to describe the flow of the information internally as well as externally between the organizations (Hang and Chau, 2007). It is also used in order to explain the strategic and the organizational issues that are internal to an organization (Sabri, 2015).

It also indicates interconnection of the organizations that are associated with each other via downstream as well as upstream associations between the procedures and processes that help in the ...

Acknowledgement

Executive Summary The relationship between ownership structure and firm performance has gained substantial attention of in the finance literature. The present study investigates the ownership structure of firms as a corporate mechanism and its impact on firm’s performance. An empirical analysis of the firms listed on NYSE and NASDAQ belonging to different sectors has been conducted to investigate the relationship between ownership structure and firms performance. The objective of the research is to identify how the corporate governance and corporate identity influence firm’s performance on the basis of three research questions provided in the following.

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Introduction

Risk is very common in any business. According to the definition given by Knight (1999), risk is measurable ambiguity of outcome whose impact may be either optimistic or pessimistic. Usually, risk is measured and expressed in terms of strong index. Many researchers think risk as unwanted event and this risk have statistical expectation value for ranking the seriousness too. Risk analysis can be defined as mathematical product value of strong and disutility. Procurement management offers advantages on economies of scale in purchasing and delivering the goods and services at right time and right place in order to minimize the risk involved ...

Introduction

Shareholders are the owners of a company in legal terms. Therefore, like any owner, shareholders also try to maximize their profit interests in any organization. In the past, organizations were more focused on balancing the wealth generation and distribution among different stakeholders such as shareholders, employees, management, and society. However, since the 1970s, private companies turned to maximize the profit of shareholders ignoring the interest of other stakeholders of the company. This has generated a huge profit for the share market, which, in the last 40 years, has expanded by almost ten times. Other stakeholders, especially the employees, have suffered in ...

Introduction

Recently, the role of a managerial accountant is widely discussed in the scholars. Johnson and Kaplan (1991) argue that management accounting is “too late, too aggregated, and too distorted to be relevant for managers’ planning and control decisions” (1). Haedr (2012) considered the mediation effect of management accounting information on motivation using contingency theory stating that “MAI usefulness accounts for a full (i.e. complete) mediation effect only on the relationship between centralization and MCS effectiveness.” (n.p.). As the number of views cannot present a unified opinion on the matter, the purpose of the current paper to reveal whether the functions of the ...

The report is being made with the objective to understand the ongoing trend in J Sainsbury Plc from 2009 till 2013. However, to facilitate in-depth analysis, we have bifurcated the report in two parts with Part 1 dealing with trend discussion relating to financial structure, investing decisions and change in dividend payments while ach of the discussion will be validated using the financial notes or through calculation of ratios. On the other hand, Part 2 is related to discussion over the change in remuneration package of the executives since 2009-2013 and how it related to the agency theory.

Part 1: Trend Analysis using Ratios:

Change ...

Abstract

Performance appraisal and employee development practices that include rewards are part of performance management systems that promote the function of human resources management in an organization. Employees and managers of an organization suffer from many flaws that affect business operations either positively or negatively. Companies reward employees who fail because a successful innovation is preceded by a series of failures. The following research aimed at investigating how organizations reward failures and its impact. The research also aimed to answer the question as to what type of rewards do organizations give those who fail, and how effective are these rewards towards employees’ ...

A Very Brief History of Franchising

Most of the historians consider that the concept of franchising started in the middle ages, at the time when the feudal aristocrats have started to sell the rights of collecting taxes and operating markets to others on their behalf. This is however representing franchising as a political activity instead of the business activity. Moreover, according to some historians the very first example of the franchising indicating a method of conducting business is traced back in the mid nineteenth century in Germany where the contact was made with the tavern/bar owners in order to sell beer entirely in taverns. But, in the ...

Introduction

The introduction of stakeholder theory as a basis for the development of Corporate Governance in the 21st century has been most effectively seen in the commitment to the sustainable economic development of employees, their families and the local community that they serve. The improvement of “society at large” it is presumed, is the basis to good business and ultimately profits (McNett, 2012). Unlike theories of agency, which propose individual decision as a model for corporate leadership, the foreign market entry of global organizations involved in trade has set the pace for increased focus on collective decision by stakeholders in response to ...

It’s Application to Corporate Governance in the 21st Century.

Corporate governance has been defined differently by various authors. According to Turbull (1997, p.1), “corporate governance describes all the influences that govern the institutional processes, including those for controlling and regulators, involved in the production and sale of goods and services”. As such, this definition indicates that corporate governance encompasses all types of firms (Donaldson, & Preston, 1995). Another school of thought has suggested that the system to govern companies, which entails controlling and directing the activities of those companies, is what constitutes corporate governance (Cohen, 1995). In essence, this system includes the market mechanisms, as well as regulatory frameworks ...

Abstract

The emerging economies are usually faced with more uncertainties than developed economies. This provides a harsh environment for operations, which creates a situation where the decisions of the organization are well analyzed before being enforced. This calls for inclusion of an independent body in the decision making body of an organization. This paper will expound on the role of independent directors in an organization in regard to emerging economies. 1. Introduction 1.1. Background Corporate governance refers to the balance that exists in the management of resources of an organization in the most efficient means in order to achieve ...

Similarities and Differences of Two Articles

Similarities The studies written by Aljifri and Moustafa (2007, pp. 71-93), and Stanwick and Stanwick (2010, pp. 35-41) have striking similarities. Both studies have comparable general objectives, in that both focused on determining corporate governance in its impact on the performance of firms. Both studies, being empirical in nature, focused not on single firms, but on their specific markets. Aljifri and Moustafa (2007, p. 72) focused on the case of the firms in UAE, while Stanwick and Stanwick (2010, p. 36-37) studied firms in Canada. Furthermore, both Aljifri and Moustafa (2007, pp. 72-73) ...

Abstract

The relationship between leadership, trustworthiness and ethical stewardship is examined in Caldwell et al.'s (2010) "Leadership, Trustworthiness and Ethical Stewardship." The authors posit that ethical stewardship leads to trustworthiness, which is an important facet of leadership in organizations and businesses. In this essay, these three primary facets are reviewed and examined, the individual relationships weighed against other research on the topic. A subjective view of these facets is also included, considering the mediating lens as a potential drawback to the theory that behaving in an ethical and trustworthy way will lead to the perception of an effective leader by employees ...

Long-Term Financing

Question 1 Suppose that a firm is operating with neutral corporate and personal taxes in an otherwise perfect capital market and Equation (I6.7) currently holds. In such a world, a firm would never take on any risky debt. Why not? (Hint: Consider what would happen in financial distress). When a firm is operates in an environment with neutral corporate and personal taxes imply that the source of financing has no impact on the tax liability of the firm. Normally, companies usually borrow debt to reduce their tax liability by deducting interest expense. Interest expense is an allowable expense for tax purposes, ...

Abstract

This paper tries to offer a summary of three key literatures, which have emerged within in the agency theory and corporate governance field since Jensen and Meckling’s (1976) pioneering piece of writing recommending their conjecture of the company. Within this paper an argument is offered as to why these predicaments occur inside the ‘nexus of contracts’ that Jensen and Meckling illustrate as portraying the contemporary company and how directors and shareholders may operate to manage these costs to make the most of company worth. The key pieces covering these parts where director’s attentions are probable to deviate from ...

AGENCY THEORY AND CORPORATE GOVERNANCE

Introduction

Agency theory by definition is a theory that focuses on the interaction and relationship between a shareholder in a company and the company’s manager. In every particular company, all stakeholders interact on different levels depending with the reason for their interaction, and this theory seeks to find a central point to solve conflicts between these two principals; the stakeholder and the company manager. Principle-agent scenarios are usually found in employer-employee relationships basically brought about by two reasons. The first reason is when there is a communication misunderstanding between the two principles; the stakeholder and the company manager(s). Prolonged communication misunderstandings always ...

The Corporations Act of 2001 (Cth) is at times referred to simply as the Corporations Act. This is generally the actual act of the Commonwealth of Australia that overly sets out the laws and regulations that deal with various business entities within the borderlines of Australia. The scope and geographical jurisdiction with reference to the Corporations Act is applicable at both federal and interstate levels. The main focus of the Corporations Act, just as its respective name suggests is on companies. However, this aspect is not so entirely as various partnerships and also managed investment structures are within the ...

Agency Theory in Supply Chain Management

Introduction

The agency theory has been around for quite a long time, but formalization of theory dates back into the 70s. In the past, there have been researches done on this topic such as the one done by Rechner and Dalton (1989) to examine the effect of management duality on risk and its effects to the share price. Others include but not limited to (Grover and Malhotra, 2003; Slack et al, 2004; Mabert and Venkataramanan, 1998; Pannirselvam et al, 1999; Selen and Soliman, 2002). In supply management, the agency theory implies that the retail chain is a series of agreements between ...