Essays on Corporate Governance and Agency Theory Article

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The paper "Corporate Governance and Agency Theory" is a good example of a finance and accounting article. Corporate Governance has become a typical issue at the moment and is attracting a good deal of public interest because of its apparent importance for the economic health of corporations and society in general. Corporate Governance is related to publicly traded, privately held, for-profit and not for profit organizations. It should outline the duties, responsibilities and powers of Directors. Directors' interest should be to the stockholders, as well as, stakeholders such as employees, customers, suppliers, creditors and the community.

Most times only stockholders interests are managed. Some theories relevant to corporate governance are Simple Finance, Stewardship and the Stakeholders theory. Stakeholder Theory The concept of a stakeholder relies on the fact that corporate activity is not solely a series of market transactions but also a cooperative (and competitive) endeavour involving large numbers of people organized in various ways. The corporation or firm is often a large organization providing a way for many individuals and groups to achieve their ends. A company shares a symbiotic relationship with its stakeholders.

A company cannot function without its employees, and the employees in turn do not get to earn a livelihood without the company. The stakeholder view to developing this theory the organization has to be viewed as a stakeholder organization. Stakeholders are the people who have an interest, claim, or stake in an organization, in what it does, and in how well it performs. ' (Jones p. 31) In a word, a stakeholder is every individual or group who is capable of effect or is affected via an organization’ s performance.

In order to investigate and measure the effectiveness of organizational performance, studying the stakeholders is necessary. It is a rather understandable saying that an extensive variety of people as well as interest groups have participation with any organization - include shareholders, clientele, suppliers, workers, the neighbourhood community, government etc.

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