Advantages And Disadvantages Of Agency Theory

Agency law is a relationship between a principal and in agent in which the agent is legally authorized to act on the behalf of the principal.

The scope of this paper is to analyze the kind of agency problems that emerges between The Hershey Company and their stakeholders and shareholders. To answer this, a review of the company`s board structure and ownership structure was made. Thereafter two specific situations that has occurred in recent times was used as case examples to enlighten the agency problems suggested to emerge by the corporate structure.

The first key group of stakeholders are the employees. These include both managers and regular employees at all levels of the organization. The managers are in charge of overseeing certain departments within the corporation. Managers must also work to implement the company strategy and work towards accomplishing the company’s

There are three internal and one external governance mechanisms used for owners to govern managers to ensure they comply with their responsibility to satisfy stakeholders and shareholder’s needs. First, ownership concentration is stated as the number of large-block shareholders and the total percentage of the shares they own (Hitt, Ireland, Hoskisson, 2017, p. 317). Second, the board of directors which are elected by the shareholders. Their primary duty is to act in the owner’s best interest and to monitor and control the businesses top-level managers (Hitt, Ireland, Hoskisson, 2017, p. 319). Third, is the

The structure and agency debate is a common one in the field of sociology and different theorists come up with different ways of accounting for the actions of social actors. This essay takes the position that structuration solves the problem of this much contested debate. Initially key concepts and elements of structuration will be pointed out .These elements include structure, agency, social systems and power amongst many others. Subsequently, there will be engagement of a discussion of different schools of thought and finally it will be demonstrated how structuration prevails over the structure-agency debate.

Managers and shareholders are the utmost contributors of these conflicts, hence affecting the entire structural organization of a company, its managerial system and eventually to the company's societal responsibility. A corporation is well organized with stipulated division of responsibilities among the arms of the organizational structure, shareholders, directors, managers and corporate officers. However, conflicts between managers in most firms and shareholders have brought about agency problems. Shares and their trade have seen many companies rise to big investments. Shareholders keep the companies running

2. A principal-agent relationships involves the owners (principals) delegating decision-making authority to managers (agents). A conflict occurs when the agents pursue acceptable levels of shareholder wealth and profit rather than a maximization of profit. They are pursuing their own self-interests. One way that the agents act in their own self-interests would be by focusing on long-term job security. This could cause the agents to limit the amount of risk taken by the firm. The firm may have an opportunity that is considered a riskier venture that could produce high profits if successful. If the venture proves to be unsuccessful, then the agent is at risk of dismissal. Therefore,

The relationship between structure and agency is a key discussion point in sociology. The concept was brought to life by the sociologist Georg Simmel, but has been discussed by many other famous theorists, such as Emile Durkheim and Max Weber. The partnership between structure and agency are crucial to the development of society, and the process of individualization.

Textualist like Scalia rejected the use of legislative history because ‘a legislature is a hydra-headed body whose members may not share a common view of the interpretive issues likely to be engendered by a statute that they are considering enacting. They think that they should merely look at the enacted text as they are merely the agent of the legislature according to the agency model’s view of the separation of powers. However, I am of the view that the agency model does not reflect the true and appropriate relationship between the judges and the legislature. The agency model only expresses one aspect of democracy, that is legislative supremacy but places like Hong Kong do not recognise legislative supremacy. Judges should not be a mere agent, they have a greater mission to ‘preserve democracy, maintain and develop human rights, and actualise the rule of law.’ Other than the ideological reasons for opposing the agency

Question 1: Describe the meaning of the term ‘Agency’ and identify the types of agency relationships that a real

Most corporate financing decisions in practice reduce to a choice between debt and equity. The finance manager wishing to fund a new project, but reluctant to cut dividends or to make a rights issue, which leads to the decision of borrowing options. The issue with regards to shareholder objectives being met by the management in making financing decisions has come to become a major issue of recent times. This relates to understanding the concept of the agency problem. It deals with the separation of ownership and control of an organisation within a financial context. The financial manager can raise long-term funds internally, from the company’s cash flow, or externally, via the capital market, the market for funds

Agency problems are said to be inherent in the corporate form of an organization. Why

Agency problem is a potential conflict between the agent and shareholders in the interest. It is shown that ownership is separated from management. This cause not only is the divergence of ownership and control, but also the information is asymmetrical. When ownership is separated

The principals (the shareholders) have to find ways of ensuring that their agents (the managers) act in their interests.

As explained by Schelker (2013), the agency problem between the owners and the management of a firm is at the heart of the corporate governance literature. Hence, there is a need for a