Case Study Of Satyam Scandal

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,

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.

In 1830, the Indian Removal Act proposed by Andrew Jackson was passed by the Congress. Many Indians were forced to give up their lands and the resources, and relocate to the unsettled territory in the west of the Mississippi River. The Indian policy of America was rather mild in the beginning compared to later. The previous president, such as George Washington, encouraged the Indians to adapt to American cultures but also allows them to keep their traditions.

exercise duty of care in relation to what is reasonably expected, taking into account the degree of control you have over work activities and work environment;

The agency problems or conflicts are continuously happening between the principal and the agent. It particularly arises when an interest conflict occurs between the principal and the agent. In terms of finance, there are two core agency relationships; managers and stockholders and managers and creditors. To balance the interests and satisfactions between managers and stockholders which helps firm to improve performance, there are a variety of different measures have been generated and implemented by Telstra in order to optimize the bond and monitoring costs.

The Sarbanes Oxley Act came to existence after numerous scandals on financial misappropriation and inaccurate accounting records. The nature of scandals made it clear there are possible measure that could be used to prevent future occurrence of financial scandals. And the existence and effectiveness of Sarbanes Oxley has caused

Duty requires a willingness to accept full responsibility for your actions and for your subordinate's performance. It also requires a leader to take the initiative and anticipate requirements based on the situation. Duty means accomplishing all assigned tasks to the best of your ability. The proper and faithful performance of duty is the standard. The value and efficiency of the soldier is measured, and the measure of his efficiency and value is not determined by the prominence of the duty which he performs.

Corporate governance can address agency problems, they are the rules that dictate the company’s behavior towards it’s directors, managers, employees, shareholders, creditors, competitors and community.

Agency is a relationship established when two parties agree to have one party act on behalf of the other. In an agency relationship, the agent (the industry member) will act on behalf of its principal. In the case of mortgage

Agency Problem: “The difficulties that arise when a principal hires an agent and cannot fully monitor the agent’s actions.” (Cornett, Adair, & Nofsinger, 2016, p. 15).

Fiduciary duty is the highest duty implied by law. An example is executive offices of a corporation owe a fiduciary duty to the shareholders.

Agency relationship refers to a consensual relationship between two parties, where one person or entity authorizes the other to act on his, her or its behalf, and they exist as mutual agreements between individuals, small firms and large organizations. Managerial opportunism is when managers use employer information for personal gain, this creates a conflict of interest, with self-serving managers making decisions that benefit them rather than the company owners or shareholders. Corporate governance problem deals with

Economic science teaches us that due to their subjective needs, individuals have subjective preferences, and hence different interest. Occasionally different subjective 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

In the process of Satyam Scandal, there are several governance principles involved a few key components.

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