Case Study Of Satyam Scandal

None of the two parties is considered superior to the other. Their interests are taken care of under the corporate policy. The theory advances on the incentives that should be offered to the agents in order to motivate them to work in line with the objectives of the company. The theory suggests that the incentives that promote moral misconduct by the agents should be eliminated. This forces the companies to develop rules that discourage moral hazard. The SWM model fails to promote the interests of all parties that form a company. Its main focus is on the shareholders. However, the agency theory successfully considers the interests of both the principals and agents. Therefore, the application of agency theory promotes social welfare and fair treatment of all the

The Satyam scandal is a corporate scandal that worked in India in 2009 where Chairman Ramalinga Raju confessed that the company's accounts had been falsified not in small numbers but largely. The Global corporate community was shocked and scandalized when the chairman of Satyam, Ramalinga Raju resigned on 7 January 2009 and confessed that he had manipulated the accounts by US$1.47-Billion. In February 2009, CBI took over the investigation and filed three charge sheets (on 7 April 2009, 24 November 2009 and 7 January 2010), which were later clubbed into one. On 10 April 2015, Ramalinga Raju was convicted with 10 other members.

Both the principal and the agent have duties. The duties of the principal include compensation, reimbursement and indemnification, cooperation, and safe working conditions. The duties of the agent include loyalty, performance, notification, obedience, and accounting.

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;

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 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

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

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).

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.

Our textbook defines an agency problem as a “conflict between the goals of a firm’s owners and its managers” (Megginson & Smart, 2009). It then defines agency costs as dollar costs that arise because of this conflict. In the corporate structure, stockholders are the owners of the firm, and they elect a board of directors to oversee the firm and help protect their investment. The board then hires the right corporate managers to run the firm with the goal of maximizing the wealth of the

“Agency is the relationship arising where one person, the principal (P), appoints another, the agent (A) to bring about, modify or terminate legal relations between the principal and a third party (T)”

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

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.

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

Agency costs are inevitable within an organization whenever shareholders are not completely in charge; the cost can usually be best spent on providing proper material incentives and moral incentives for agents to properly execute their duties, thereby aligning the interests of shareholders (owners) and agents.