Agency Theory And Stakeholder Theory - 1851 Words

The interests of stakeholders, including individuals, corporations and society, are in extreme conflict with each other and have different goals they want to be achieved. This essay will be arguing that social and non economic interests can be aligned as well as the interests of certain stakeholders, in particular the shareholders and executive directors/managers, can be aligned to a certain extent as there will still be some conflict in interests. The first half of this essay will be introduce agency theory and stakeholder theory and how it looks to align the interests of individuals, corporations and society. Also discussed in the first half essay will be how Cadbury looks to align the interests of the stakeholders. The second half of the essay will be arguing the reasons for and against the alignment of interests, such as executive pay and structure of boards. Agency theory and stakeholder theory will be a reoccurring theme throughout the essay because the arguments made will be linked back to either stakeholder theory or agency theory and if possible, be discussed from both of the theories perspective. Principal - agent relationships is when one party, the principals, hires another party, the agents, to act on their behalf. Shareholders hire executives or managers to take control of the firm and make decisions on their behalf to maximise their interests. The control of the business is divorced between the principals and the agents therefore there is a conflict ofShow MoreRelatedAgency And Stakeholder Theories To The Enron Debacle6344 Words   |  26 PagesBusiness and Society Review 110:1 59– 76 Applying the Agency and Stakeholder Theories to the Enron Debacle: An Ethical Perspective Blackwell Oxford, Business BASR  © 0045-3609 O 1 110 BUSINESS CULPAN riginal 2004 Center UK Article and and Publishing, and TRUSSEL Society for SOCIETY Business Ltd. Review REVIEW Ethics at Bentley College REFIK CULPAN AND JOHN TRUSSEL INTRODUCTION W e examine the infamous Enron debacle from an ethical perspective by deï ¬ ning its theoretical underpinnings and analyzingRead MoreDiscuss the Influential Role That Agency Theory, Transaction Cost Theory and Stakeholder Theory Have Played Both in the Conception and Reform of Corporate Governance. 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This model of corporate governance often called as the relationship based method due to the close relationship maintained between companies and their major shareholders. This close relationship, little separation of ownership and control minimises the agency problem. However, as a result of the minimum separationRead MoreCorporate Ethics Theory And Stakeholder Theory1309 Words   |  6 Pagesbeen regarded to devote solely to the company’s shareholders. However, this notion is seen as immoral. This is because according to the notion of corporate social responsibility, business must behave ethically, represents a broader recognition of stakeholders and must take into account economic, social and environmental inputs in the way it operates. 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It is implementedRead MoreThe Effect of Agency Problems in Value Maximization636 Words   |  3 PagesTHE EFFECT OF AGENCY PROBLEMS IN VALUE MAXIMIZATION Siti Balkish Roslan ZP01796 Financial Management 2/2013 According to HBS Professor Michal C. Jensen, many managers are caught in between the desire to maximize the value of their companies and the demands of â€Å"stakeholder theory† to take into account the interests of all the stakeholders in a firm. It is already agency problems arise within a firm whenever managers incentives to pursue own interests at the shareholder expense. 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The agency is a contract between the principal which are shareholders and the agent which are the managers . Most of the literature on corporate governance finds its roots in agency theory the relationships normally occurs when the principal hires the agent to perform a service