The paper "Dangerous Frontiers in Corporate Governance" is a good example of a business assignment. Directors who are found guilty of the criminal offences should be investigated criminally. These directors should be liable for their dishonesty if found guilty. The directors should also repay for the funds which were obtained by dishonest means. Directors are leaders in the organization and hence must always be role models to the employees. The relationship between the principal and the agent should always be transparent. When a director is involved in a dishonest act in the organization, then it will lead to conflicts between the shareholders and the executives (Josh Bendickson 2016, p.
176). The executives are entrusted with managing the organization and for this reason, they should do it with all honesty. The theory is essential in solving issues that arise where the goals of the agents, as well as those of the principal, are unaligned. The conflicts arise where the principal is limited from acquiring information about the agents due to resources hindrances. The principal hence becomes unaware of the activities carried out by the agents.
Most agents, in this case, take advantage of the company’ s fund because they have a perception that their actions may go unnoticed. In addition, failure to define the risks that are shared by the principal and the agents may also result in the crisis (Josh Bendickson 2016, p. 179). In this case, the agent utilizes the resources that lawfully belong to the principal. Principals are the decision-makers in the organization and as such, they require consulting agents in matters pertaining to risks. Since the risk burden is always a burden to the agents, then it is important for the two parties to come to a consensus before any decision is made for the firm.
Agency theory also recognizes the importance of the third party. When an agent represents the principal in areas such as transactions with the firm, then the agent, in this case, is a third party because he or she is acting on behalf of the principal. Most of the directors embezzle the company funds for illegal businesses and as such, they should be charged for breaking the law.
The government and private watchdogs, on the other hand, should be on the lookout and report in case they notice illegality of the directors. Andrew Sigalla is one of the directors that have been caught in fraud. He was the chairman of the Sydney based technology company when he was found to have been transferring funds to 24 different accounts. The money was however used to fund illegal gambling groups. The man was found guilty of defrauding the company approximately 9 million dollars. The former director was hence guilty of all the fraud offences and misusing the funds of the firm for personal gain and was sentenced in the Supreme Court for the two crimes (Whitbourne 2017, p. 10).
This is the step that the legal system should take to all leaders who get involved in the dishonest acts, especially in the financial affairs of the organization they lead. The legal action against the corrupt agents ensures that the rights of the principals are put in check by the law.
Clarke, T. 2014. Dangerous frontiers in corporate governance. Journal of Management and Organization, p. 272.
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Whitbourne, M. 2017. Directors warned after boss jailed. Business News, p.10.
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